PracticeAccounting FirmsLaw firms turn to Deloitte on huge tax slug threat

Law firms turn to Deloitte on huge tax slug threat

Some of the City’s leading law firms are seeking advice from Deloitte on the threat of huge tax slugs

A group of about five City law firms have teamed together for advice from
Deloitte
on HM Revenue and Customs (HMRC)’s clamp down on tax relief for costs relating
to equity partner hires and has also instructed a leading tax counsel to write
to HMRC while many others are taking advice from accounting firms individually.

More than half of the UK top 50 law firms, including many of the top 10 city
firms, are understood to be negotiating with HMRC, legalweek.com reports.

Some law firms, particularly US law firms in London, rely heavily on
recruiting which can cost more than £100,000 per partner hire in the City as
recruiters charge up to 20% of a lateral’s annual pay, making the HMRC approach
a heavy blow to handle.

‘HMRC’s current stance is that such fees are not deductible against tax. We
and most other advisers believe there is at least a case to answer to say that
they could be tax deductible,’ a Deloitte spokesperson said.

Further reading:

Qualified advice preferred option to IR35 probe

Contractor bid to overturn IR35 ruling

Read
the Legalweek.com story

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