The title of this article has biblical connotations. The Bible’s Book of Proverbs states, “Without counsel plans fail, but with many advisers they succeed”; also: “Plans are established by counsel; by wise guidance wage war.”
Those words of wisdom were obviously not directed specifically at tax advice or tax planning, and “wage war” is perhaps a melodramatic metaphor for dealing with HMRC; nevertheless, the underlying message about seeking advice and guidance potentially applies to tax, as it does to life in general. “Counsel” is also an apt expression in tax circles, as “tax counsel” means a barrister specialising in tax.
Many readers will have experience of instructing tax counsel. However, my overall impression from working with professional firms over long years is that a significant number have no such experience. Why is this? Could it be that access to tax counsel is unduly restrictive?
Is it only the larger professional firms that are likely to need and benefit from using tax counsel? Are the fees of a tax barrister likely to be prohibitively expensive? This article seeks to address these questions and others – from the horse’s mouth, so to speak – with kind help from members of Gray’s Inn Tax Chambers in London.
Not a privileged few
For some, the term “counsel” or “barrister” might conjure images of men and women dressed in court gowns and wigs, seated in throne-like, leather bound chairs behind extremely large polished desks in lavish, chandelier-lit chambers.
Sealing their expensive scrolled legal opinions with candle wax, we envisage them being fiercely guarded by their clerks from access by us mere mortals in the outside world.
There may also be some who think that instructing tax counsel is restricted to those with a legal qualification. In fact, these preconceptions are inaccurate – or at least the last one is.
Accountants and tax advisers who are members of certain professional bodies, including the ICAEW and CIOT, have licensed access to barristers.
Licensed access is broadly a system where organisations or individuals who are suitable to instruct barristers due to their expertise in particular areas of the law can apply to the Bar Council to be licensed to instruct barristers in those areas. See ‘Licensed access: accountancy and tax’ for a full list of licensed professional bodies in accountancy and taxation.
Licensed access: Accountancy and Tax
Members of the following professional bodies are licensed to instruct a barrister directly (see http://www.revenue-bar.org/licensed.asp):
As a member of the Chartered Institute of Taxation (CIOT), I have licensed access to instruct any barrister and the CIOT has published guidance about instructing a barrister on its website (www.tax.org.uk/members/member-services/member-support/instructingabarrister).
However, readers who are not members of a licensed professional body may still be able to access certain barristers directly, through a ‘public access’ scheme; see www.barcouncil.org.uk/instructing-a-barrister/public-access/ for further information.
Finding a tax barrister or tax chambers is made easier by the Revenue Bar Association (RBA), which brings together details of barristers specialising in tax. The RBA website (see ‘Useful references’) has a database of individual tax counsel, together with a list of tax chambers, and also chambers with tax specialists.
Revenue Bar Association (RBA) www.revenue-bar.org
Instructing a barrister: Licensed access www.barcouncil.org.uk/instructing-a-barrister/licensed-access/
Special Advocacy Scheme (CIOT, ICAEW and ACCA members) www.revenue-bar.org/sas.asp
Joint Advisory Scheme (CIOT, ICAEW and ACCA members) http://www.revenue-bar.org/jas.asp
Licensed Access Guidance ‐ Handbook for Clients www.barcouncil.org.uk/media/160453/licensed_access_guidance_-_handbook_for_clients.pdf
Chambers and Partners http://www.chambersandpartners.com/uk-bar
Large and small
There is perhaps a perception in some smaller professional practices that seeking assistance from a tax barrister is unsuitable for them, on the basis that instructing tax counsel is the domain of the Big 4 accounting firms or Magic Circle law firms with detailed and complex tax issues.
However, Laurent Sykes noted that, in practice, there is no typical profile for instructing firms, and the instructions are “many and varied, from large firms to sole practitioners”.
It will generally be useful for someone who is seeking tax counsel’s assistance to have a sound level of tax technical knowledge. However, this is not invariably the case. For example, Imran Afzal pointed out that one of his clients is a law firm which does not practice tax, but the firm occasionally recommends him to its own clients when tax issues arise.
What type of tax work is suited to using tax counsel? Nikhil Mehta commented: “The work broadly falls within two categories: contentious and non-contentious.” Nikhil explained that contentious work means not only going to tribunal or court, but also includes (for example) negotiating with HMRC; while non-contentious work might involve “problem solving and structuring”.
With regard to tax advisory work, Barrie Akin noted: “The range of advice goes from short telephone conferences through to highly detailed formal written opinions.” Michael Firth summarised the other types of work that tax counsel may be asked to undertake as including tax planning, risk identification, correcting mistakes, advising on the merits of an appeal, and conducting the appeal.
In short, seeking tax counsel’s help does not necessarily depend upon the size of your practice, or the nature and complexity of the tax issue.
Another perceived and not uncommon stumbling block is counsel’s fees. Imran Afzal commented: “I think some clients may be of the view that tax counsel should only be instructed when there are very large sums of money at stake.”
Tax counsel’s fees may be a relevant factor here, with professional firms possibly proceeding on the basis that the amount of tax at stake must be substantial in order to justify the cost involved.
The preconception will often be that counsel’s fees are likely to be prohibitively high, a point acknowledged by Michael Flesch QC: “It is often thought that tax barristers are too expensive.”
However, Michael added: “The senior clerk will be able to advise you, in advance, of the fee that would be charged by any particular barrister(s) in his chambers. And the hourly rates (particularly at the junior end) are very competitive with those charged by solicitors or accountants of a comparable level of seniority.”
A different, and perhaps helpful, way of looking at counsel’s fees is in terms of the potential return on that expenditure, as Michael Firth explained: “I tend to think of it in terms of an investment decision: ‘It’s going to cost me £X to have a (say) 60% chance of gaining £Y; is that a good investment of my money?’”
However, Michael was quick to point out that his suggested approach was not intended to constitute financial investment advice.
How to instruct counsel
Readers who have not instructed tax counsel before may be discouraged from doing so due to uncertainty about how best to set about the task. Conversely, those readers who have instructed tax counsel before (particularly those who do so only occasionally) might wonder whether their instructions could be improved.
Is there a right or wrong way of instructing tax counsel? Imran Afzal thought not: “In my view there is no ‘right way’ to instruct counsel. If the client is unsure about what to include in instructions, or what documents they should send me, I am happy to discuss this with them.”
Michael Firth was of a similar view, but pointed out: “There is no ‘wrong way’ to instruct us, but more information is always better than less.”
Michael Flesch QC provided the following general pointers when instructing tax counsel:
- Make sure you give counsel all the relevant facts. If uncertain about relevancy, include the information.
- Indicate clearly the points on which advice is required. But also instruct counsel to “advise generally”.
- Do not be afraid to suggest your own tax analysis.
- There is no need to quote the legislation or judgments at length. But give clear references where you can.
In addition, Hui Ling McCarthy offered some guidance about instructing counsel in particular circumstances:
- Transactions yet to be carried out. Provide counsel with as much supporting documentation as might be relevant (eg sets of accounts, key contracts, correspondence). Hui Ling observed: “I know that instructing accountants and solicitors sometimes believe that it’s better and easier for counsel to be sent a careful selection of documents, but that usually isn’t the case.”
- Open HMRC enquiries. If there has been an exchange of correspondence with HMRC, it is useful to see it all (if practicable). Hui Ling explained: “It is important to know what has gone before, especially if you will be asking counsel to draft letters to HMRC with the object of settling the matter.”
- Potential litigation. It is far less important to provide a complete set of documents with the instructions if the case looks likely to litigate. If the matter is substantial, only short instructions and some of the key documents might be necessary initially. Hui Ling added: “If counsel is being instructed to represent a client at a hearing, then the documents that would be needed to support the client’s case would be one of the topics for discussion during an early telephone call or conference. One of my cases last year involved almost 100 lever arch files by the time it reached the tribunal. Needless to say, they were not all sent to chambers with the initial instructions.”
It is probably reasonable to say that interactions with tax counsel are much more informal now than was traditionally the case in bygone days. For example, Nikhil Mehta pointed out: “The use of email, as it does in other uses, quite often means that instructions are sometimes a bit more casual, and counsel have to be alert to that.”
He added: “The key is that there is much less formality than there used to be, but that is not a substitute for quality.”
The role of clerks
The clerk at the barrister’s chambers is generally the first point of contact when seeking assistance from tax counsel.
Chris Broom, senior clerk at Gray’s Inn Tax Chambers, acknowledged that contacting chambers for the first time might seem a little daunting: “I always look at how I would feel when making first contact with a professional body that, to the outside world, is steeped in history, rules and tradition; but chambers are now very modern, forward thinking, user-friendly businesses that have adapted to their clients’ needs.”
Nigel Jones, senior clerk at Pump Court Tax Chambers, described clerks as “the business managers of chambers”, adding: “We are in place for a reason – to allow the barristers to concentrate on their ‘proper’ job. We take away administrative burdens such as the agreement or collection of fees and ensuring compliance with bar standards board rules.”
Those seeking to instruct tax counsel for the first time may be unsure whether there are any procedures for contacting clerks.
However, Nigel Jones reassuringly pointed out that, on the whole, new clients are surprised to discover that there are no particular protocols. But what about the potentially thorny subject of tax counsel’s fees? “We are very used to being transparent, and flexible, with regard to costs. If clients are in any doubt whatsoever, then I would say always ask for the senior clerk initially, as they will give you the best advice in the circumstances.”
Chris Broom offered the following pointer towards agreeing counsel’s fees: “The clerk may sometimes request a short outline, by email, so that he can go away and discuss with counsel the likely work involved. This enables me to come back with a far more accurate quote. Clients should remember that there is no obligation to instruct counsel until you have made the decision with your client and once that happens, the fees are agreed, so it is worth spending the time with the clerk to get the quote as accurate as possible and to manage your client’s expectation on fees.”
As someone who has instructed tax counsel on many occasions over the years, I have always found them to be eminently approachable, and their assistance to be invaluable. I have heard it argued that using tax specialist firms is a viable alternative to using tax counsel, on the basis that a similar level of service can be provided at a lower cost – in which case, as a tax specialist myself, I may be doing myself out of future work by extolling the virtues of using tax counsel.
However, I see tax specialists and tax barristers more as allies working alongside each other than as competitors. Tax work is becoming ever more complex and specialised and there is a part to play for both tax specialists and tax counsel.
Furthermore, even experienced tax specialists need a second opinion from tax counsel from time to time, and as Michael Flesch QC pointed out: “A tax barrister will be able to discuss particularly knotty problems with his colleagues in chambers.”
Some smaller professional firms, in particular, do not contemplate using tax counsel in my experience. It is hoped that this article will encourage those firms, and others, to have a go at instructing tax counsel.
Start by contacting a chambers clerk, obtain advice if necessary on the most suitable tax counsel based on the particular circumstances, and seek to agree a fee in advance for the work to be undertaken. By using tax counsel where necessary, you will undoubtedly be doing your clients a great service.
Finally, I am grateful to the following for their helpful views and comments for this article: Imran Afzal, Barrie Akin, Michael Firth, Michael Flesch QC, Hui Ling McCarthy, Nikhil Mehta and Laurent Sykes, all of Gray’s Inn Tax Chambers. I am also grateful to Chris Broom, senior clerk at Gray’s Inn Tax Chambers, and Nigel Jones, senior clerk at Pump Court Tax Chambers, for their valuable assistance.
Mark McLaughlin CTA (Fellow), ATT (Fellow), TEP