Tax law: area of practice
Tax lawyers are specialists who get involved in a broad variety of commercial matters. They advise on tax efficient ways of structuring transactions and dealing with the tax authorities.
Working with lawyers from other practice areas within the firm
Tax solicitors often work as part of a team with colleagues from other areas of a law firm’s practice, advising on the tax aspects of transactions. Typically, they advise on corporate sales and acquisitions, property deals, restructurings, finance transactions, employee benefit packages and a whole host of other matters with a tax aspect. Advice often centres on how clients can alleviate tax bills. Clients are varied and include companies, investment funds, individuals, charities and public bodies. There may be an international aspect to the work, advising multinational or overseas companies operating in the UK.
Tax lawyers also negotiate tax indemnities and warranties with those advising on the other side of a transaction. On a corporate sale, this is where the parties apportion between themselves who is going to bear the risk that the company being sold has to pay more tax for periods prior to the sale than was expected and make sure that any additional tax costs are properly reflected in the price paid for the company.
Tax lawyers also regularly deal with HM Revenue & Customs (HMRC). This can involve seeking clearances on how the tax regime applies to proposed transactions. Sometimes disputes with HMRC lead to litigation. The complexity of the tax system and the amounts of money at stake mean that tax litigation can be particularly busy.
In one case, we had advised a university implementing a scheme to mitigate the VAT cost of building a new student library. We then corresponded with HMRC over the effectiveness of the scheme before following the case through the courts from the VAT tribunal all the way to the House of Lords (before it became the Supreme Court), which, I am glad to say, found in favour of our client. The current challenge for the government is how to increase tax revenue without stifling economic recovery. The government frequently talk about tackling the problem of tax avoidance and their rhetoric goes down well in the media. However, sometimes commentators fail to distinguish illegal tax avoidance from legal tax planning. The courts uphold the principle that a business is entitled to structure its affairs within the law to minimise the tax payable. However, the courts may prove hostile to artificial tax planning that tries to exploit unintended loopholes. Tax lawyers guide their clients through the maze of tax law, help them resist unjustified demands by HMRC for tax payments, all the while maintaining the highest standards of professional integrity.
You’ll find that the work is more office based for tax lawyers than for some other areas, although you do have regular client contact. The workload tends to be reasonably regular. Late nights and weekend working are comparatively rare but sometimes necessary to get a transaction across the line.
How recession-proof is tax law?
The recession has reduced the number of corporate, finance and real estate transactions where tax lawyers would usually give advice. However, some areas of tax work have become much busier, including company and fund reorganisations and debt restructuring.
The workload of a trainee solicitor
Depending on the firm, trainees tend to work from 9.00 am to 6.00 pm. Because of the complexity of the work, it often isn’t possible for trainees to manage their own files and instead they will support more senior tax lawyers in the team. This may involve conducting legal research, writing notes and letters, assisting with warranties and disclosures on corporate deals, and dealing with HMRC. Even if you don’t choose to stay in tax law, you will have learned skills that are likely to be relevant to your eventual specialism.
Types of law practised
Good tax solicitors have...
- Strong analytical and legal skills to devise advice for clients.
- A willingness to keep up to date with a regularly changing area of law.
- Good teamworking skills – cross-departmental teams are common.
- An ability to present complicated technical advice in a clear and approachable way.
- Commercial awareness – an understanding of how your advice will affect clients’ business.
- NB: no advanced mathematical ability is required.
CHRISTOPHER TOWNSEND is a partner specialising in tax and employee share schemes in the corporate/commercial group at MILLS & REEVE LLP. He graduated with an economics degree from Cambridge University.