First, the government tried to go after the Limited Liability Partnerships (LLP} (and failed). Now, it is scrutinising law firms’ client accounts, with a focus on propping up the criminal justice system.
Headlines have been filled with attacks on David Lammy’s latest plan to fix the crumbling justice system by seeking to take a proportion of the interest earned on lawyers’ client accounts in England and Wales and remit it to the government’s coffers.
But lawyers see this as a “tax raid” on a sector already contributing £38bn to the UK’s GDP.
There is no doubt that Lammy has a task on his hands. The crisis in the justice system is severe, with backlogs of over 80,000 cases, and courts are literally falling apart.
Despite these issues, lawyers say the justification is “flimsy.”
There are questions as to why one sector should be singled out to fund a public service that benefits everyone. On top of this, there is a risk that some high-street firms may lose this revenue, leading to price increases or even closure.
But the MoJ has pointed to similar schemes in the US, Canada, Australia, and France.
