In a nutshell
Tax lawyers are a permanent feature in almost every industry, but they are most in demand (and most highly paid) when it comes to transactional and regulatory matters for corporate clients. Private client lawyers also increasingly have to be tax experts when advising high net work individuals on how to structure their wealth. Navigation of this highly analytical and complex practice area often necessitates a degree of proficiency in accountancy as well as legal adroitness.
Tax lawyers in the private sector ensure that clients structure their business deals, assets, or day-to-day operations such that they take advantage of legal breaks and loopholes in tax legislation. A public sector tax lawyer is primarily employed to provide advice and assistance regarding regulations, but also works on investigations, audits and prosecutions of tax evading organisations. Although this is predominantly an advisory practice area, on occasion matters can veer into litigation territory.
What lawyers do
- Ensure that clients take advantage of legal breaks and loopholes in tax legislation.
- Handle tax planning for clients, making sure they understand the tax ramifications of purchases.
- Address the ownership and disposal of assets, including advising on structuring corporate portfolios in the most tax-efficient way.
- Offer transactional advice when working with corporate lawyers on M&A deals, joint ventures and property portfolio acquisitions.
- Deal with investigations or litigation resulting from prosecution by Her Majesty's Revenue & Customs (HMRC, sometimes referred to as 'the Revenue'). Litigation is always conducted against or brought by the government.
- Work alongside private client lawyers on matters of private wealth.
Realities of the job
- This is an intellectually rigorous, rather cloistered area of law and is ideally suited to the more academic practitioner.
- Corporate tax lawyers are very well paid, treated with reverence by their colleagues and find intellectual stimulation in their work.
- Lawyers must not only have the ability to translate and implement complex tax legislation, but must also be able to advise on how to structure deals in a legitimate and tax-efficient way to avoid conflict with HMRC.
- If you don’t already wear specs, expect to after a couple of years of poring over all that black-letter law. The UK has more pages of tax legislation than almost any other country, and there are changes every year.
- In time extra qualifications, such as the Chartered Tax Adviser exams, will be useful.
- Don't expect to be on the side of the angels: you may end up spending your time advising big businesses on how to avoid paying tax without breaking the law.
- Read our True Picture on the Government Legal Service to find out about working at HMRC.
- In the wake of the revelations leaked in the so-called 'Panama Papers' – which saw a number of well-known companies and individuals hit the headlines for tax avoidance (which, unlike tax evasion, is legal) – there has been significant pressure to tighten international and domestic tax rules relating to offshore tax havens. The UK has agreed to share information on the ownership of companies and trusts, international summits have been held to discuss plans to improve the regulation and implementation, and the European Parliament has begun an investigation.
- As a result of the Panama leaks and previous scrutiny of tax avoidance, law firms have witnessed an increase in the number of clients paying close attention to their tax affairs in a bid to avoid public scrutiny and exposure in the press. Tax law was once the sole preserve of backroom brainboxes; it's now a big political, social and economic issue.
- A so-called 'Google tax' has been introduced to try to stop companies avoiding tax by moving profits abroad. The new 'diverted profits tax' (set at 25%) came into being on 1 April 2015 and means companies with a turnover higher than £10 million will be asked to unveil their inner structures to HMRC, so it can assess if any profits have been artificially moved around.
- It's estimated that in 2015/16 HMRC brought around 1,000 prosecutions for tax evasion, up from 770 in 2013/14. At the same time a clampdown on tax avoidance saw the Revenue claw back £26.6 billion in taxes in 2014/15, £2.7 billion more than the year before.
- The introduction of the Patent Box in 2013 offered tax relief on company profits gleaned from UK-held patents. Further tax relief incentives include video game relief, introduced in 2014. The Patent Box is being phased in until 2017.
- HMRC has pledged to clamp down on online tax avoidance by obtaining private data from millions of online transactions. Financial data will be collected from companies such as Paypal to see whether UK citizens are gaining income online without declaring it.
- Taxpayers could soon be paying one single earnings tax if national insurance contributions and income tax are merged. This suggestion has been put forward because some businesses have struggled with the expensive process of dealing with national insurance contributions, which are paid weekly.
- The precise impact on tax law of the UK's decision to leave the EU will depend on the terms of the exit negotiated, but many important aspects of the current regulatory system hang in the balance. Many cross-border facets of the UK's VAT and corporate transactions regimes are regulated by EU law. Double tax treaties will still be in place with many countries once the UK leaves the EU, but many aspects of tax legislation will be open to adaptation.