Lawyers’ tax bill revealed – it’s £31 million

Monday 29 June 2015

Law firms are paying around £31 million in tax and Social Security contributions every year, according to a leaked report into their contribution to the Island economy.

The report, compiled by KPMG, says that the Island’s law firms are paying the government around £31 million in Income Tax, GST and Social Security – as well as spending £8 million on IT, £2.5 million on private health insurance and around £680,000 on CPD courses.

On top of the direct spending, KPMG’s report also estimates that the legal aid contribution by the Island’s law firms – lawyers have to take on legal aid cases for their first 15 years’ service – is equivalent to 42 lawyers working full-time.

The report states: “The legal profession is part of society’s fabric and is an enabler for many other businesses on the Island.

“Without a well-respected legal sector, the number of other businesses operating in Jersey would be significantly reduced. All in all, it appears that Jersey’s legal profession offers a lot more to the Island than people may realise.”

The report was compiled on behalf of the Law Society at a time when the question of how to legal aid is being raised by firms.

It has been estimated that law firms are effectively contributing between £5 million and £7 million per year to the legal aid system.

In a submission to a review into Access to Justice last year, the president of the Law Society of Jersey - Advocate Jonathan Speck - cited article 4.2 of the European Convention on Human Rights and warned that a challenge could be brought on the grounds of “forced labour."

In his letter, Advocate Speck also said that one small firm has already gone under because of its legal aid burden, and that the system may be breaching the human rights of applicants too. And he claimed that the maintenance of the scheme in its current form is “not sustainable” and that the States should provide appropriate funding to offset the burden on the legal sector.