Article

16 January 06

Brown softens tax blow

The additional tax burden following the changes to assessing work in progress can be spread over three years


The Society has welcomed Gordon Brown’s decision to ease the financial blow facing many legal firms following the adoption of UITF 40, by allowing payment of the additional tax over three years.

Firms face a hefty increase of possibly 50-100% in their tax bill next year without having generated additional income to pay for it, as a result of the new system which alters how the service provider accounts for revenue and work in progress.

The Society has argued that the change could threaten the livelihoods of some smaller firms, particularly those which carry out legal aid work, and has worked with HM Revenue and Customs to seek resolution.

Isobel D’Inverno, Convener of the Society’s Tax Law Committee and Director of Corporate Tax at MacRoberts, said: “This is good news for the profession as a whole and for the many practitioners who would have struggled to pay their tax bill next year.

“The Society, along with other professional bodies including ICAS and the Law Society of England and Wales, has worked very hard to negotiate a solution and I’m very pleased with the outcome.”

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