SRA Confirms Fining Power Increase to £25,000

SRA Confirms Fining Power Increase to £25,000

Towards the end of 2021 the SRA announced that they were proposing an increase in fining powers from £2,000 to £25,000. In addition, the regulator announced the development of a new fast track system for ‘fixed penalties’ for low-level offenses. It was recently announced that these proposed changes will go ahead. Upon confirmation of the increasing fining powers the SRA said that cases with fines below £25,000 are usually matters which are straightforward to investigate and do not merit the time of the Solicitors Disciplinary Tribunal.

The regulator conducted a consultation on the proposed changes and 39 formal responses were received. Furthermore, the consultation engaged with 7,500 people via focus groups, surveys, polls and emails, etc. From this consultation the regulator claims that the majority of respondents were ‘broadly in favour of the principles’. However, some respondents had differing opinions on how the proposals should be implemented.

 

 

What effects will the changes have on the legal sector?

This increase in fining power should mean that the number of cases given to the Solicitors Disciplinary Tribunal will decrease. This will enable the Solicitors Disciplinary Tribunal to focus on more serious breaches of the rules.

For the first time ever, the SRA will be taking the firm’s turnover and the individual’s finances into account when applying fines. The aim of this is to ensure that largest firms are punished more severely for breaking the rules.

Further amendments to the rules say that any cases where sexual misconduct, discrimination or harassment are involved must result in suspension or a strike-off instead of a fine unless there are exceptional circumstances.

Independent adjudicators that have not been involved with the investigation will be imposing the fines. The SRA have said that this new approach will be monitored and they will analyse the impact on particular groups including older solicitors, men, and minority ethnic backgrounds. These three groups are all over-represented in the enforcement process.

Currently, the SRA is in a consultation to discuss how they will publish decision notices and what information it shares. Once the increased fining powers are introduced this will be highly significant as the Solicitors Disciplinary Tribunal normally presents additional details when their judgments are published.

 

Looking forward

Towards the end of 2022 another consultation will be held to discuss how the fixed-penalty regime will be implemented and which breaches it should cover.

 

 

How can we help?

Hawsons is one of the few accountancy practices with a dedicated team of solicitor accountants specialising in the needs of solicitors and legal professionals.

We act for a large number of law firms across all three of our offices and offer a wide range of services which are tailored to meet their individual needs. Our legal client base consists of a multitude of firms of varying structure and size, from sole traders to limited companies and LLPs with corporate members.

Our understanding of the unique issues that many in the sector are facing, combined with our technical experience, allows our solicitor specialists to provide you with proactive, commercial and informed accountancy and tax advice.

Free initial meeting

Simon Bladen

Partner, Sheffield

0114 266 7141
Dan Wood, Partner

Dan Wood

Partner, Doncaster

01302 262 367
Richard Burkimsher, Partner

Richard Burkimsher

Partner, Northampton

01604 645 600

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The LSB (Legal Services Board) has developed a new website called reshapinglegalservices.org.uk. The new website aims to present research and insight about the future of legal services from lawyers, regulators, tech experts and consumers.

The idea behind the website is to demonstrate the progress made by organisations and people operating in legal services that are implementing the LSB’s 10-year sector-wide strategy. This strategy has been divided into nine challenges. If you would like to find out more about the nine challenges please visit the reshaping legal services website.

There is already some promising content on the website including articles from Lawtech UK on how data can benefit legal services, and thoughts from Kingsley Napley championing diversity in the profession.

Over time, the aim is to reflect the importance of collaboration in reshaping the legal services sector to drive better services, fairer outcomes and stronger confidence.

 

How can we help?

Hawsons is one of the few accountancy practices with a dedicated team of solicitor accountants specialising in the needs of solicitors and legal professionals.

We act for a large number of law firms across all three of our offices and offer a wide range of services which are tailored to meet their individual needs. Our legal client base consists of a multitude of firms of varying structure and size, from sole traders to limited companies and LLPs with corporate members.

Our understanding of the unique issues that many in the sector are facing, combined with our technical experience, allows our solicitor specialists to provide you with proactive, commercial and informed accountancy and tax advice.

Free initial meeting

Simon Bladen

Partner, Sheffield

0114 266 7141

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Dive with caution…Partnership income or employment income

Dive with caution…Partnership income or employment income

In Corrigall [2022], The First-tier Tribunal (FTT) found that earnings from diving could not be treated as income from a partnership.

The appellant in this case was employed as a gas and air diver for UK and international companies. The appellant, however treated his UK employment income as trading income of a partnership split between himself and the other partner, being his spouse.

Therefore, he only reported 50% of this income on his tax returns. This led HMRC to opening an enquiry into the submitted tax returns and subsequently giving notices to the conclusion that all UK employment should be treated as 100% income of the appellant and not partnership income.

The appellant’s argument against this was that ITTOIA 2005, section 15 reclassifies employment income of a diver as trade income and that on this basis the income of such a trade should be taxed on the owners of the trade being him and his wife.

The appellant argued that because HMRC had allowed for expenses such as spouses wages against the diving income that this meant the appellant was trading with a view to a profit with his wife in relation to all of the diving income. Furthermore, because a partnership tax return and accounts were filed with HMRC, he argued that the existence of a partnership had been established.

Nonetheless, the FTT concluded that there had to be evidence that the partners were indeed trading with the view to make a profit and as such the partnership returns and accounts were not sufficient evidence.  Further, upon reading ITTOIA 2005 section 15, it refers to a trade of the employee only, the language used does not extend the meaning to include a trade owned by another person, in this case as partnership income.

The FTT found that the appellant was the sole employee and thus his tax returns needed to reflect 100% of the income from diving which would be taxed as trading income under S15 ITTIOA 2005

In similar cases such as Puttnam [2019], the FTT came to the same conclusion. The application of ITTOIA 2005, section. 15 merely describes the manner in which employment income is taxed and does not change the legal characteristics. Therefore, trading income carried out solely by one diver cannot be regarded as partnership income.

Therefore, please check with your tax advisor before you take that dive.

 

How can we help?

Our team of specialist tax advisers provide expert tax advice in Sheffield, Doncaster, and Northampton. Our tax advisers provide the full service from tax advice to tax planning, and through to compliance across cases from the relatively simple to highly complex tax advice across the full range of taxes.

Whether you are a company or an individual looking for tax advice our tax advisers can help with practical tax advice and planning.

Tax law changes regularly and our tax advisers are always on hand to offer new advice if rules or your circumstances change. This way you can relax knowing your tax affairs are being dealt with by a tax adviser and you can get on with living your life and running your business.

Free initial meeting

Dalia Qarawi

Dalia Qarawi

Personal Tax Supervisor, Northampton

01604 645 500

Aaron Hemmington

Tax Partner, Northampton

01604 645 600

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What is the transfer of a business as a going concern for VAT purposes?

What is the transfer of a business as a going concern for VAT purposes?

What is the transfer of a business as a going concern for VAT purposes? Be Aware, Getting it Wrong Can be Costly!!

The transfer of a business as a going concern for VAT usually involves high ticket items. To get the VAT liability wrong can lead to severe penalties/interest and it is in a company’s best interest to get these transactions right first time, rather than trying to unravel a situation post transaction. It is always worthwhile checking with your Hawsons VAT contact before the transaction takes place.

Normally the sale of the assets of a VAT registered or VAT registrable business will be subject to VAT at the appropriate rate. A transfer of a business as a going concern (TOGC) however is the sale of a business including assets which must be treated as a matter of law, as ‘neither a supply of goods nor a supply of services’ by virtue of meeting certain conditions.

Where the sale meets the conditions the supply is outside the scope of VAT and therefore VAT is not chargeable.

HMRC sees the conditions as being:

  • The assets must be sold as part of a ‘business’ as a ‘going concern’*
  • The purchaser intends to use the assets to carry on the same kind of business as the seller
  • Where the seller is a taxable person, the purchaser must be a taxable person already or become one as the result of the transfer
  • Where only part of a business is sold it must be capable of separate operation
  • There must not be a series of immediately consecutive transfers
  • There are further conditions in relation to transactions involving land/Buildings. See link below – Section 2.3:

 

https://www.gov.uk/guidance/transfer-a-business-as-a-going-concern-and-vat-notice-7009#how-to-apply-the-togc-rules

Free initial meeting

Tony Nickson

VAT Consultant, Sheffield

01604 645 600

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Advisory fuel rates for company cars

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which take effect from 1 June 2022. The recent record prices for petrol and diesel and has caused advisory fuel rates to increase across the board, as rates for petrol, diesel and LPG increase by at least 1p per mile on all engine size categories.

HMRC reviews the advisory fuel rates quarterly on 1 March, 1 June, 1 September, and 1 December. The rates are based on the fuel type and engine size of the company car.

The fuel rates for journeys undertaken on or after 1 June 2022 are as follows:

PETROL  
Engine size Petrol – amount per mile
1400cc or less 14p
1401cc – 2000cc 17p
Over 2000cc 25p

 

LPG  
Engine size LPG – amount per mile
1400cc or less 9p
1401cc – 2000cc 11p
Over 2000cc 16p

 

DIESEL  
Engine size Diesel – amount per mile
1600cc or less 13p
1601cc – 2000cc 16p
Over 2000cc 19p

 

Hybrid cars are treated as either petrol or diesel cars for this purpose.

The advisory rate for fully electric cars is 5 pence per mile. Electricity is not a fuel for car fuel benefit purposes.

The rates apply when you either:

  • reimburse employees for business travel in their company cars, or
  • require employees to repay the cost of fuel used for private travel.

The previous rates, which were effective from 1 March 2022, can be used for up to one month from the date the new rates apply, so until 1 July 2022.

Previous rates

From 1 March 2021 to 31 May 2022

Engine size Petrol – rate per mile LPG – rate per mile
1400cc or less 13 pence 8 pence
1401cc to 2000cc 15 pence 10 pence
Over 2000cc 22 pence 15 pence
Engine size Diesel – rate per mile
1600cc or less 11 pence
1601cc to 2000cc 13 pence
Over 2000cc 16 pence

If you would like to discuss your car policy, please contact us.

Free initial meeting

Craig Walker

Tax Director, Sheffield

0114 266 7141