Accounting for Law?
Traditionally accounting and law have been very distinct, separate professions, each requiring specific study and qualifications to master and practice. Yet as business evolves, the lines between the two are […]
Traditionally accounting and law have been very distinct, separate professions, each requiring specific study and qualifications to master and practice. Yet as business evolves, the lines between the two are starting to blur, and clients are beginning to seek all their professional advice from one place – with accountants coming out on top.
Many top accountancy firms already offer legal advice, particularly in relation to tax, and last year ICAEW launched an application to the Legal Services board to officially be able to regulate legal service provision, which was approved by them in June this year.
However, the MoJ have since overturned that recommendation, so it looks like such far-reaching plans may have to be kept in ice – for now.
The Legal Services Act 2007 reserved six areas of legal practice that only authorised or exempt individuals could carry out (conduct of litigation; rights of audience; reserved instrument activities; notarial services; and administration of oaths; as well as probate (which it has had authority over since 2014)). These areas are all ultimately regulated by the Legal Services Board.
On 20 July 2016, the ICAEW applied to the Legal Services Board to be designated an approved regulator and licensing authority across all reserved legal activities, and this application was approved on 23 June 2017.
However, just this week the Lord Chancellor overturned the decision, providing a setback in proceedings for ICAEW.
What happens next?
The recent march of the accountants has been seen as a disruptive force to the legal profession thus far, bringing increased competition and forcing traditional firms to innovate, so lawyers may well see the MoJ’s decision as some cause for celebration. It’s unclear what ICAEW’s next move will be at this early stage, but the rationale behind their initial application still very much exists.
Accountancy practices are facing cost pressures on their general audit work, and so are looking to diversify into more general business advisory practice, and many hope that provision of taxation related reserved legal services will allow them to become a one stop service for clients. Indeed, some accountancy practices see provision of legal services related to tax as a way to regain lost revenue, particularly with fears that the Making Tax Digital (MTD) initiative will hit their profitability when it comes full on stream.
Meanwhile, changes to the legal regulatory regime may mean that accountants who are qualified to exercise higher rights of audience will have the ability to take advantage of legal professional privilege: potentially further undermining the role of solicitors and barristers as key professional advisers. However, the key barrier to expansion into the tax litigation arena, is likely to be the fact that they are conflicted in many cases, which the Lord Chancellor referred to in his letter to ICAEW.
Consultation documents suggest that the ICAEW may try and develop a new style of accountancy training that incorporates the skills necessary to advocate on taxation matters, so this is something to keep an eye on following recent events.
For more junior accountants starting out in their careers (especially those in larger practices), this diversification of business may well present opportunities to get a broader skillset across accountancy, tax and law. This is especially good for those with a more general interest in business, who might not want to commit to being purely an accountant for the rest of their lives. Keep your eyes open for learning opportunities within your firm, and don’t be afraid to put your hand up to get stuck in!