In a nutshell
We get it, when you picture yourself setting off on a career at the Bar, you might have something a bit more glamorous in mind than tax. But take it from us, there’s a great deal more to the Tax Bar than meets the eye...
The first thing to note is that there’s an important distinction between contentious and non-contentious matters at the Tax Bar, and while most barristers will probably do both, you are likely to prefer one or the other. The contentious side usually revolves around disputes with HMRC or for HMRC against a taxpayer (whether that’s an individual or a company) when something has gone wrong: “The tax tribunal is a very informal, generally friendly jurisdiction, but it's a serious court that will deal with everything from a £100 penalty to a £1 billion international corporate tax matter, and everything in between,” Max Schofield, tax barrister at Devereaux Chambers tells us. The non-contentious side is the advisory side of the coin, “which is about trying to make sure that things go right,” Schofield explains, “it’s about businesses coming together and trying to make sure there aren’t any problems in the future, which would then become part of the contentious work. It’s about helping entities to make sure they are compliant, to make sure their tax treatment is both correct and beneficial to them – think about the taxation of corporate takeovers, personal wealth management, or supplies between connected entities, for example.” This often requires a solid grounding in commercial law: understanding partnerships, companies, and complex financial instruments.
A quick bit of industry jargon it will be helpful to get clear on is the distinction between what we call ‘direct’ and ‘indirect’ tax. The former is paid directly by the taxpayer to the government (e.g. income tax or capital gains tax), the latter is the kind of tax that’s placed on goods or services, and so something a consumer might pay ‘indirectly’ through the higher cost of these products (like VAT) which is then collected and paid to HMRC by a business. As Schofield points out, it’s the latter where things get particularly interesting from his perspective: “A lot of people think that the government just uses tax to collect money, but the government also uses tax to try to change behaviour too. They want people to stop smoking, not drink so many sugary drinks, or encourage going to the theatre,” he continues, “but there’s a tension there because if no one actually does smoke or drink sugary drinks, there won't be any money coming in! Government and businesses have to balance these factors when operating in the market: if I have a higher rate of taxation on one product, I can maybe lower the price and absorb that loss, or I can increase the price to reflect the full tax which may lead to selling fewer things. So, it’s fascinating to look at the economics of taxation. Tax can often be about trying to understand and address social and economic policy in practice.” Chambers and Partners’ rankings for the UK Bar include one category specifically for Indirect Tax, and then Tax more broadly and Private Client tax dealing with wealthy individuals.
Realities of the job
- As Schofield explains, a lot of tax disputes revolve around something called statutory interpretation – the process of working out the intention and proper interpretation of particular pieces of legislation: “I worked on a case fairly recently where we were dealing with a reduced rate of VAT to encourage the hospitality industry during COVID. The idea was that you could have a reduced rate of tax on food and drink, but not alcoholic drinks. Now that would normally be fine, but the legislative draftsman decided to define alcoholic drinks by a statutory definition,” a drafting device which involves what’s called an exhaustive definition – “which basically means it should cover everything! The definition included beer, wine and spirits, but they forgot cider! So, we said: ‘well thank you very much. We will follow the law and have a lower rate of tax on our cider please!”
- “For me, on a normal week, I'll have a few cases dealing with VAT on food and drinks. Looking at things like: what's the difference between a biscuit and a cake? What does the legislation mean when it says products that are similar to potato crisps or similar to ice cream? What is the difference between drinks, beverages, and liquid food? I will be looking at the different meaning of those words and what the legislation is trying to achieve in taxing or not taxing different items,” Schofield adds.
- Of course, a lot of tax barristers will spend time working on compliance issues, such as penalties in cases where people have incorrectly completed a tax return, for example. In these cases, it’s about trying to find out whether they’ve done so intentionally, carelessly, or simply by accident. At the far end of these disputes, cases will concern fraud and tax evasion.
- Also falling under the remit of the Tax Bar are more factual commercial disputes, for example where a company is actually resident, and therefore where it is required to pay tax: “Is it being run in the UK and therefore paying UK tax, or is it being run in Bermuda where there’s no tax? And that means looking at the nuances of business meetings and board minutes, corporate structures, who the controlling minds are, where they are working and what the company is doing. It’s about making a factual assessment to make sure we fit with the law.”
- It is fair to say that when dealing with disputes concerning large amounts of money, tax law is also an area that can pay well for members of the bar.
Some tips
- As Schofield is quick to highlight: “The uninitiated often think the tax law has probably got something to do with numbers, but I guarantee most tax lawyers are fairly innumerate like myself! We look at words. In statutory interpretation, it’s about the meaning of words, the context of those words and the purpose of the provisions. In all of these disputes, the most important element is going to be someone who's comfortable reading a lot of material and capable of thinking about broader concepts and the philosophy of the system.” Tax lawyers need to understand why we have limits on the amount of products you can bring through customs at the airport, as well as why only certain items are permitted as business expenses, for example.
- For Schofield, one of the most important things to bear in mind is that tax law, perhaps more than anywhere else, is ever-changing: “Every year, we have a new Finance Act. We have a new tax that came in only two days ago! This year, in the budget, we've got a range of new taxes. We now have to understand how those work. What do the words mean in the statute? What's the purpose? What's the context? It's always evolving. You have to be able to do that with some speed and pace to make sure your clients aren't left behind.”
- Finally, Schofield notes, “it is important to remember that these disputes will have a human element. It all involves money, but also other things that people care about for example their work, their employees, and their reputation.Most disputes involve an argument either against the state or acting for the state, and wielding the power of the state to collect money, essentially with penal force, is something that has to be measured and proportionate. With great power comes great responsibility!You probably don't need the bedside manner you'd need in a criminal case, but you're still dealing with clients and their money, and they will want reassurance that they're paying for advice that will help them at the end of the day.”