Lawyers reap the rewards
Andre Agassi may be a tennis player, but I feel a football analogy is more
fitting, perhaps ‘we was robbed’. As a result of last week’s Court of Appeal’s
decision, accountants, surveyors, tax advisers and other professionals in the
game of litigation now have to accept that only clients of solicitors can claim
costs through the Bar Licensed Access Scheme (formerly called Bar DIRECT).
The case started when Agassi challenged if he should be assessed under the
legislation brought in to tax sportsmen and entertainers, when he was not
domiciled or resident in the UK and his offshore company was receiving
endorsements from offshore companies.
Tenon Media defended him against HM Revenue & Customs and the special
commissioners and the High Court initially ruled against him, but he won at the
Court of Appeal after they instructed Patrick Way of Grays Inn Tax Chambers.
This was not the end of the story. Perhaps unwittingly, Agassi v Robinson has
become the test case in the Licensed Access Scheme. After winning in the Court
of Appeal, Agassi’s litigation team asked for costs against the HMRC.
While HMRC was prepared to pay counsel’s costs, it refused to pay costs from
Tenon on the basis that they were not solicitors, but accountants.
At a further hearing of the Court of Appeal on the matter of costs. Agassi
failed on the main issue on the reclaim of Tenon’s costs. The court decided that
he could not recover any costs of work performed by Tenon Media that could have
been performed by a solicitor.
This clearly represents a massive restriction in the activities that
accountants can carry out for their clients and have the costs reimbursed.
I simply do not understand how we have a situation where costs from an
accountant, or other licensed professional, should be rejected as legitimate
expenses for reclaim where directly equivalent costs of a solicitor qualify. Sur
ely litigation is, as we always suspected, a game of two halves, at the end of
which the lawyers win.
Mike Warburton is senior tax partner at Grant Thornton
Penalised for saving money
Once upon a time, barristers could receive instructions only through
solicitors. This outdated rule has been progressively relaxed. In 2001, a rule
change enabled the Bar Council to licence accountants and tax advisers to
instruct barristers direct in tax appeals.
Andre Agassi’s case seemed to show what a good scheme ‘licensed access’ was.
He won his case in the Court of Appeal and, according to the senior costs judge
who sat as an assessor, the bill from a solicitor could have been three times
higher than the bill from his tax consultants, Tenon.
However, HM Revenue & Customs objected to paying Tenon’s costs. Taxpayers
may be surprised that HMRC would prefer to pay three times higher bills on its
The Law Society attended the hearing to attack the arrangement as leading to
illegality. It contended that, by the Solicitors Act and the Courts and Legal
Services Act, it was unlawful for a non-solicitor to write letters to an
opposing party on behalf of a litigant.
The court rejected that argument, and held that the scope of restricted
activities was narrow – effectively limited to issuing a claim form or similar
formal steps at court. The court also praised the licensed access scheme as
having clear advantages and encouraged tax appellants to use it.
Nevertheless, the Court of Appeal held that the present Civil Procedure Rules
limited costs recovery to the barrister’s fees and narrowly defined
‘disbursements’. This does not mean that none of Tenon’s bill can be recovered:
it is estimated that up to 41% of its bill could be.
The court’s suggested solution to this unfortunate outcome was that the
Chartered Institute of Taxation should apply to the Lord Chancellor to become an
In the meantime, it is absurd that costs recovery should be circumscribed
where a litigant has used costs-saving arrangements. The normal criterion is
that costs may be recovered where reasonable and proportionate. I hope that the
rules are urgently re-examined.
Lincoln Crawford OBE is a barrister and vice-chairman of the Bar
Council’s Access to the Bar Committee
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