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 worth individuals on how to structure their wealth. Navigation of this highly analytical and complex practice area often necessitates a degree of proficiency in mathematics and an interest in accountancy.
Tax lawyers in the private sector ensure that clients structure their business deals, assets, or day-to-day operations in such a way 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 permitted by tax legislation.
- Handle tax planning for clients, making sure they understand the financial 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'). This 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, and potential penalties imposed by, 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 new changes implemented 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.
- Covid-19 sent shockwaves through the tax world as much as it did anywhere else. The enormous level of public spending required to keep the economy together during the 2020 lockdown has prompted fears of tax hikes in the future. At the time of writing, sources within the government were suggesting there would be no "horror show of tax rises," but some changes will surely be necessary to address what is now a £2 trillion national debt.
- The dramatic events of 2020 have also intensified calls for increased transparency surrounding tax havens and corporates avoiding paying tax in the UK (through technically legal but morally dodgy methods). The Finance Bill 2020-21 aims to take action against those who promote and market tax avoidance schemes.
- With the housing market having ground to a halt during lockdown, the Treasury attempted to rocket-boost a recovery via a temporary increase in the residential stamp duty land tax (SDLT) nil rate band for the period of 8 July 2020 to 31 March 2021. The threshold in England and Northern Ireland has been increased from £125,000 to £500,000.
- The Digital Services Tax (DST) came into effect on 1 April 2020, despite rumours to the contrary. This represents a 2% tax levied on UK digital services revenues including social media services, internet search engines and online marketplaces. Targeted against internet giants, the tax only affects large businesses which have annual global revenues of more than £500 million and more than £25 million attributable to UK sales.
- It's no surprise that businesses affected by the DST have attempted to get around the problem, with Amazon making a move to increase seller fees in September 2020, essentially passing the 2% levy down the chain.
- Taxation of giant tech companies looks likely to be one of the most contentious points in the negotiation of a UK-US trade deal post-Brexit, with most of the targeted tech firms based in America.
- On Brexit more broadly, many cross-border facets of the UK's VAT and corporate transactions are regulated by EU law. For example, the EU currently offers tax relief for cross-border mergers, so UK businesses may find themselves incurring greater tax costs as a result of leaving the EU. Double tax treaties will still be in place with many countries as the UK leaves the EU and enters the transition period, but many aspects of tax legislation will be open to adaptation. Boris Johnson’s new ‘free ports’ idea is similar to that of Singapore’s: having ports where goods can come through with little-to-no import taxes and an easier time of things regulatory-wise.
- Britain's social care crisis has only got worse in recent years. Over-40s in the UK may be expected to pay more tax to contribute towards the cost of care later down the line. This is currently being examined by the Department of Health and Social Care, but finances surrounding social care are a touchy subject, as demonstrated when Theresa May's 2017 proposal to alter how care is paid for drew widespread criticism and prompted a swift U-turn.