Solicitor
At Cassons we have been advising solicitors for many years. Our clients range from solicitors in practice by themselves, to those practising in large partnerships. Our assistance includes general business advice, as well as advice on issues unique to solicitors. Whatever your issue, we have probably dealt with it before.
For example:
Accounts
Do your accounts meet the requirements of HM Revenue & Customs (HMRC)? They must show a “true and fair view”. This means that debtors, creditors and work in progress must be included. This last item can be difficult to quantify eg what about contingent fee matters? We can assist you in valuing your work in progress so it is not unnecessarily high, thus minimising your tax liabilities whilst still providing a valuation which is acceptable to HMRC.Recent guidance on generally accepted accounting practice relating to when you recognise income may mean you are understating your turnover and profits. Have you considered this? It could have a significant impact on your tax liabilities. Simply deferring raising invoices is not acceptable, you need a clear policy in place. In future you will also need to account for income where you have done some of the work but not yet raised an invoice. For more details, click on the link to our guide "Service contracts - the tax liability time bomb!" in the related literature section below.
We provide a comprehensive set of annual accounts detailing your firm’s performance. We meet with you to discuss these accounts to help you to reach conclusions about ways to improve performance.
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Solicitors' Accounts Rules
The 1998 Rules have been compulsory since May 2000. They are complex, and with the volume of transactions passing through most solicitors’ client accounts in a year, and the fact that there is no de minimis level set for breaches, the Law Society expect virtually all Accountant’s Reports to report breaches!Are you up to date with the Rules?
- Did you know that you are no longer required to inform a client that monies held on their behalf will be used to settle a bill of costs? Or, indeed, that once a bill or other notification of costs has been sent to a client, you MUST transfer monies out of client account within 14 days or you are in breach of the Rules?
- New Rules have been introduced relating to how “regular payments” from the Legal Services Commission, as defined, are to be dealt with.
- Client account cheques need not be physically retained provided the stored images comply with the new Rules.
We can also assist with the practical application of the Solicitors Accounts Rules, including handling client money, controlled trusts and the need to maintain a central register, client reconciliations including providing you with a pro forma schedule to carry these out efficiently in accordance with the Rules, and complying with the interest Rules.
Records
Are you accounting correctly for receipts from the Legal Services Commission, including the VAT requirements? This is a complex area and typically one of the most difficult to get right.Limited liability partnership?
Have you thought about becoming a limited liability partnership (“LLP”). Some legal firms already operate in this way. We can advise you what’s involved and the advantages and disadvantages of LLPs.Financial planning
Do you plan for future tax payments? We will calculate these and advise you well in advance of the payment dates, to help you plan the firm’s cashflow. In some cases, our clients prefer that we make provision for future tax liabilities in their accounts, reflected in partners’ drawings. This helps them monitor drawings and avoid partners drawing excessive amounts, not leaving enough to cover their tax payments.Taking financial planning a step further, we can assist you in establishing a structure for partners’ capital and current accounts, determining appropriate amounts for partners to leave in the firm as capital and establishing what is available for them to draw out on a monthly basis. A clear policy on partners’ drawings greatly assists in managing cashflow.
You may be paying more than you need to in bank charges and interest. We can introduce you to alternative lenders. Through careful planning it may be possible for you to get tax relief on your borrowings, where you have not previously done so. We have done this many times in the past.
Premises
Have you consided whether or not to own property in the firm? How is this reflected in the accounts? How are non-property owning partners to be dealt with, including the treatment of property expenses and the charging of rent? We can assist you with this.Partnership matters
We can assist you in drafting partnership agreements and with partnership negotiations and dispute resolution. You may have issues with the ongoing running of the firm, or perhaps succession planning for new partners or retiring partners, including the valuation of goodwill or the structuring of a deal. We can assist you in all these areas. |
Where next?
General…
