The UK Tax Bar: Trends and Changes
Philip Baker QC of Gray’s Inn Tax Chambers takes an in-depth look at trends and changes at the UK Tax Bar over the past few years:
"The tax system has become ever more complex, more difficult to track in its rapidly meandering changes and, hence, more difficult to advise on. Older colleagues wistfully look back to days when they might have two or three conferences each day, many of the conferences asking one or two very basic questions."
Having started in practice at the tax Bar in 1987, it is not surprising that I have seen a significant number of changes and new trends, particularly in the last few years. At that time, instructions to the tax Bar still came exclusively from solicitors, even though it was often the client’s accountant who had drafted the issues on which advice was sought. Solicitors’ firms traditionally sent a junior staff member to “take a note”, while real discussion took place with the accountants. Not long after I commenced in practice, accountants were authorised to instruct members of the tax Bar directly, and now the majority of instructions in compliance and advisory work tend to come from accountancy firms. Solicitors’ firms tend to be involved only where it concerns either private client matters, large commercial matters, or litigation. A growing amount of work comes directly from in-house lawyers or accountants in companies.
One of the major changes over the past few years has been the increase in the amount of tax litigation, particularly at the tribunal level, including litigation on behalf of HMRC. The reorganisation of the tribunal system, and the demise of the local general commissioners, meant that more cases are being heard in the first-tier tribunal, and counsel is more frequently instructed. HMRC’s litigation and settlement strategy has also reduced the scope for settling disputes by agreement, and created a large flow (and backlog) of litigation disputes. Traditionally, HMRC only instructed the revenue junior (the treasury junior in chancery was the formal title, I believe) to appear for them, and seldom instructed members of the tax Bar to litigate, whether as juniors or as silks. This has changed dramatically – and very much for the good – in recent years. Junior members of the tax Bar are now able to apply and join one of the attorney general’s panels, and can – and in some cases do – spend virtually the whole of their time litigating on behalf of HMRC. Equally, there is a much greater willingness of HMRC solicitor’s office to instruct QCs at the Tax Bar either to advise them or to represent them.
This growth of work for HMRC at the tax Bar has had several, knock-on, consequences. First, members of the tax Bar are less likely to advise and appear exclusively for taxpayers, and have a much better idea of HMRC’s thinking on both advisory and on tax cases. Secondly, it has raised much greater dangers of potential conflict of interests as compared with the days when members of the tax Bar acted almost exclusively for taxpayers. In the past, the vast majority of junior members of the tax Bar never saw a revenue brief: now they see them quite regularly, and need to be much more conscious of potential conflicts.
A change which has had perhaps-unintended consequences is the reform of the QC competition system which took place almost 10 years ago. The new competition system, designed to be more open and less subject to criticism, focuses on evidence-based submissions proving the applicant’s experience and skills, largely in litigation matters. The problem here is that, whilst these criteria might be wholly appropriate for the general Bar, they are largely inappropriate to a highly specialist Bar like the tax Bar, where there are still less opportunities to develop skills in litigation. Under the old, pre-reform system, it was possible for members of the tax Bar who had almost exclusively advisory practices to attain silk nevertheless because their reputation was so strong in advisory areas. It is now extremely difficult for somebody who has a largely advisory practice to satisfy the new criteria. This means that there is a pressure on junior barristers to do more litigation, even if their skill set is much more suited to advisory work. Alternatively, individuals who are very good at advisory work are almost forced to abandon any prospect of taking silk. If the award of Queen’s Counsel is a mark of expertise in litigation, then perhaps this is appropriate (though frankly most junior members of the tax Bar still do less litigation than those at the general Bar). If, however, the letters QC indicate leading members of the Bar, then the new system is failing the tax Bar badly. It needs to have flexibility to accommodate those who are clearly leaders of the profession, but are known largely or almost exclusively for their advisory and compliance work.
One of the significant changes in the last few years has been the virtual demise of mass-marketed tax avoidance schemes, and with it the work for the tax Bar in vetting and issuing opinions in support of such schemes. This change has come about as a result of several changes to the tax legislation – the introduction of disclosure of tax avoidance schemes legislation, and the introduction of a general anti-abuse rule, are perhaps the most significant changes – as well as a general change in the atmosphere in society about such marketed schemes. Not every member of the tax Bar was involved in vetting and issuing opinions in support of these schemes (it is something that I never found myself involved in, for example), but it was part of the work of some members of the tax Bar. It may be an activity that is not missed by HMRC or the public in general. It has meant that some members of the tax Bar who previously focused more on this side of work have apparently shifted their professional activities into other aspects of the tax system.
These movements within the tax Bar have also been affected by movements in the Bar generally. The reduction in legal aid and other changes to litigation have meant that there is less work for the general Bar in certain sectors. One trend that has become noticeable is the involvement of members of the Bar from chambers not generally recognised as specialist tax chambers in tax matters. Individuals from non-tax chambers appearing for HMRC has always been a regular feature, but now one sees some of these individuals also appearing or advising non-government clients as well. While the revenue Bar obviously has no monopoly of knowledge or wisdom in this area, the tax system is becoming more and more complex, and there is ever-present the danger of non-specialist practitioners dabbling occasionally in one of the most complex areas of the legal system. Taking a course in revenue law perhaps many years ago, and one or two appearances for the Crown in basic tax cases, is not necessarily adequate preparation for complex tax advisory or litigation work.
This leads to perhaps the most significant trend over the last 20 years. The tax system has become ever more complex, more difficult to track in its rapidly meandering changes and, hence, more difficult to advise on. Older colleagues wistfully look back to days when they might have two or three conferences each day, many of the conferences asking one or two very basic questions. Now, virtually any set of papers discloses a myriad of highly complex issues, may require two or three days of preparation, and the consultation itself may last for several hours or a whole day in conference. There is no reason to expect this complexity to reduce, and it makes it harder and harder for members of the tax Bar to hold themselves out as advising in all areas of revenue law. Aside from those who decide to specialise almost exclusively in litigation (partly for reasons explained above), those who focus on tax advice and compliance are tending to advise on part only of the tax system. In effect, practitioners are becoming increasingly niche experts in parts of the tax system. For myself, I focus almost exclusively on international aspects of the UK tax system, and on issues of international tax law in general. I have a grasp (hopefully a good grasp) of the domestic tax system and areas such as VAT and stamp duty. However, like many members of the tax Bar, my expertise is becoming more niche and, in my case, focused on complex international aspects. This tendency for members of the tax Bar to focus either on tax litigation or to focus on advisory and compliance work in niche areas is, I suspect, a trend that is likely to continue so long as the tax system remains as complex as it has become.