Legal Body Delivers Blistering Critique of Government's Client Account Tax Plan
The Law Society has launched a fierce attack on the government's controversial proposal to appropriate interest earned on lawyers' client accounts, denouncing it as a "fundamentally flawed" sector-specific tax that could undermine the stability of Britain's entire legal economy.
Ministry of Justice Consultation Sparks Outcry
Last month, the Ministry of Justice initiated a consultation on establishing an Interest on Lawyers' Client Account Scheme (ILCA), with Justice Minister David Lammy framing it as "a way for the legal sector to contribute more to the justice system it relies on." The proposal specifically targets funds held in client accounts across England and Wales, including those managed by third parties.
While Lammy has emphasised that addressing the crisis in the criminal justice system remains his primary focus, his parallel suggestion to eliminate certain jury trials to reduce backlogs has already drawn widespread criticism from legal professionals and civil liberties advocates.
Extended Consultation Period and Immediate Backlash
The original consultation deadline of 9 February was unexpectedly extended to 9 March just four days prior, but this procedural adjustment has done little to temper the legal community's vehement opposition. Law Society president Mark Evans has demanded the proposal be immediately withdrawn, citing both financial impracticality and potential legal violations.
"The justice system is a vital public service and the government should fund it sustainably through general taxation, not through the appropriation of client money," Evans declared in a strongly-worded statement. He elaborated further, "It is fair that we all pay for this system through general taxes, in the same way that we all pay for our healthcare system, rather than patients contributing more."
Broader Context of Professional Services Taxation
This development follows recent speculation that Chancellor Rachel Reeves had considered implementing additional taxation on limited liability partnerships (LLPs) during the Autumn Budget, a measure that was ultimately avoided by the professional services sector. The Law Society's intervention highlights growing concerns about targeted fiscal measures that could disproportionately affect specific industries.
The legal body argues that such sector-specific taxation represents a dangerous precedent that could destabilise the financial foundations upon which legal practices operate, potentially compromising client trust and the overall integrity of the justice system.
