UKSC blog
The warning notice issued by the Solicitors Regulation Authority (SRA) suggesting that solicitors who facilitate tax avoidance are necessarily breaching the SRA Code of Conduct is shown to be incorrect, according to research from LSE.
In an article for the British Tax Review, Dr Michael Blackwell writes that the concept and facilitation of tax avoidance in and of itself does not necessarily entail such breaches or negligence.
Furthermore, by seeking to restrict the availability of legal advice, the SRA have probably breached their own regulatory objective of supporting the constitutional principle of the rule of law.
Dr Blackwell writes that despite their warning notice, the SRA have not altered their Code of Conduct, and the conclusions of the warning notice are inconsistent with established case law regarding the Code of Conduct. In issuing their warning notice, the SRA have therefore arguably breached their own legal obligation to uphold the rule of law, by limiting the availability of legal advice to citizens.
Dr Blackwell, Assistant Professor of Law in LSE’s Department of Law, said: “Tax evasion is wholly unacceptable and a criminal offence. In contrast, tax avoidance does not involve concealment: rather it rests on legal arguments that a tax charge is not payable on the agreed facts.
“While tax avoidance is not a criminal offence, taxpayers, whose behaviour falls into the category of “tax avoidance”, are nowadays the subject of social opprobrium. Similarly regarded are the professional advisors who facilitate such schemes.
“As the warning notice on tax avoidance limits the availability of legal advice to citizens, the SRA have arguably breached their own legal obligation to uphold the rule of law. Also, the warning notice is a bit of a muddle with regard to what exactly the SRA regard as prohibited. There are more proportionate ways to tackle avoidance.”