In-depth guidance on SRA Accounts Rules compliance, partnership tax planning, LLP conversion, and practice succession. Written specifically for solicitors and law firms navigating UK tax regulations and legal sector accounting.
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View guideConveyancing Compliance
A conveyancing deal collapsing does not make the work tax-free. If you raise an abortive-cost charge, you have supplied legal services and the fee is standard-rated for VAT at 20%, exactly as a completion fee would be. This guide covers the VAT on the abortive charge, the WIP write-off under FRS 102, how disbursements already incurred are handled, and the tax point under VATA 1994 s.6.
Practice Finance & Cash Flow
The apprenticeship levy is a payroll charge of 0.5% of an employer's annual pay bill, reduced by a £15,000 allowance, so in practice only firms with a pay bill over £3 million pay it. This guide explains how the levy is calculated, how the apprenticeship service account and co-investment work, the levy transfer (now up to 50% of the previous year's funds since 22 April 2024), and how levy funds can support the Level 7 solicitor apprenticeship, against a level 7 funding restriction that took effect from January 2026.
SRA Compliance & Trust Accounting
Money a firm handles as attorney or Court of Protection deputy is client money under SRA Accounts Rule 2.1(c), but it also sits inside the Office of the Public Guardian's supervision regime. This guide explains the client-account discipline, the OPG supervision levels, the deputy's security bond, the annual report and the VAT on the firm's fees.
VAT & Compliance
A conditional fee agreement is a no-win-no-fee arrangement under CLSA 1990 s.58, with a success fee capped at 100 per cent of base costs and, in personal injury, a 25 per cent cap on the success fee taken from damages. The legal framework is the easy half. The hard half is accounting and tax: under FRS 102 the firm recognises revenue only when success is probable and measurable, carries CFA WIP conservatively, and the VAT tax point falls at the win, not as time is recorded.
Structure & Incorporation
Incorporating a law firm into a company or ABS is two parallel projects: SRA authorisation of the new body, and the tax-efficient transfer of goodwill, WIP and debtors. This guide covers section 162 incorporation relief for the partners, the related-party goodwill trap that blocks the company's 6.5% relief, and why this is a different step from converting a partnership to an LLP.
Conveyancing Compliance
Referral fees are lawful in conveyancing provided they are disclosed: the LASPO 2012 ban reaches only personal-injury and death claims, not conveyancing. This guide explains the SRA Code paragraph 5.1 disclosure duties, the SRA Transparency Rules on published prices, and the VAT treatment of referral fees both paid to introducers and received by the firm (standard-rated at 20%, never a disbursement).
Structure & Incorporation
Admitting a company as a member of a law firm LLP can retain profit at the corporation-tax rate, but only to the extent of the company's genuine commercial return. This guide explains the mixed-membership rules (ITTOIA 2005 sections 850C to 850E), which reallocate any excess profit back to the individual partners, and why the structure is not a clean way to halve tax.
VAT & Compliance
A damages-based agreement pays the firm a percentage of what the client recovers, not a fee for time spent. The Damages-Based Agreements Regulations 2013 cap that percentage at 25% for personal-injury claims at first instance, 35% for employment matters and 50% for all other claims, and crucially each cap is inclusive of VAT. This guide explains the three caps, why the VAT must be carved out of the cap rather than added on top, how revenue is recognised under FRS 102 only when recovery is probable, and when the VAT tax point arises.
VAT & Compliance
Litigation ties up a firm's cash for years: disbursements go out early and, on no-win-no-fee work, the firm's fees may not crystallise until the win. Matter-level funding products bridge that gap. This guide explains disbursement funding, third-party litigation funding and after-the-event insurance, then sets out the tax treatment of funding fees (the wholly-and-exclusively test), the VAT and SRA treatment of funded disbursements (funding does not change the eight-condition disbursement test), how funded client money must be routed under the SRA Accounts Rules, and why ATE premiums are generally not recoverable post-LASPO.
SRA Compliance & Trust Accounting
A clean client account has every penny identified to a named client or matter, with a clear reason it is still held. Suspense entries, unidentified receipts and dormant balances are the three ways an account drifts from that ideal, and they are exactly what an accountant's report and an SRA inspection target. This guide explains the SRA's expectations, how the five-weekly reconciliation surfaces these balances, and a clean-up routine to run before the report.
Practice Finance & Cash Flow
Professional indemnity insurance is mandatory for every SRA-regulated firm and the premium is one of the largest fixed costs of the year, usually falling due as a lump at the 1 October renewal. Premium finance spreads that cost into monthly instalments at an interest price. This guide explains how premium finance works and sets out the tax treatment: the premium is a deductible trade expense, the finance interest is also deductible because the borrowing funds a mandatory business cost, and neither carries recoverable VAT because PII is exempt insurance and credit is an exempt financial supply.
Partnership & LLP Accounting
Being promoted from fixed-share (or salaried) partner to full equity partner in a UK law firm is, for tax, a change of status rather than just a pay rise. This guide walks the event in order: the exit from the salaried member rules, the switch from PAYE to self-assessment, the capital buy-in you now have to fund, the qualifying-loan interest relief on funding it, and the first-year payments-on-account cash shock. Figures are 2025/26.