ICAEW gets reserved legal services recommendationby
ICAEW members are one step closer to offering reserved legal services in a move that could recover some of the work firms may lose through Making Tax Digital, the Institute said.
In a letter to the Lord Chancellor the Legal Services Board (LSB), the independent body responsible for overseeing regulation in the legal sector, recommended ICAEW’s application to be a regulator and licensing authority of five reserved legal activities.
Duncan Wiggetts, ICAEW’s executive director of professional standards, called the approval of ICAEW’s application a “positive step” for consumers who want to use a qualified ICAEW chartered accountant firm. “The LSB’s decision is evidence of the role that it is playing in transforming the provision of legal services and giving more choice to the consumer,” he said.
The LSB's decision would allow ICAEW to extend its regulatory and licensing authority activity to conduct of litigation, rights of audience, reserved instrument activities, notarial services, and administration of oaths. The first three of these services would be restricted to taxation services only.
Replace compliance gap created through MTD
Because of the emphasis this licensing has around taxation – particularly advocacy and trustee work – Peter James, the ICAEW’s head of regulatory policy, said that the expanded governance would allow firms to recoup work lost through the gradual digitalisation of tax.
“Typically the work of an accounting practice at the moment is one for tax advice, and two for compliance. If that compliance work comes down [because of MTD] they'll be looking to try and replace that in some way,” he said.
“The opportunity here to be able to not just prepare documents for court cases around tax but actually to go and present the arguments is an added skill base they'd be able to use. And from a client's point of view, they do not have to see different people in order to get a tax bond dealt with.”
Opportunity for smaller firms
While the legal services greenlight would be something that interests larger firms that want to widen their services, it also opens an opportunity for smaller specialised firms who offer tax investigations, trusts, and estate services to include probate services or mergers between accountancy firms and solicitors.
“We haven't set up a qualification and training to do the advocacy side, but what a firm can do is bring a qualified solicitor or barrister onto its books to be part of the workforce and they could deliver direct to clients,” James said.
While this is more of an option for medium-sized firms, James advised that smaller firms could bring in a solicitor from the high street to do the court work and other legal work in order to widen the appeal of the accountancy practice to a professional service type practice.
More regulatory options builds on probate services
The professional body’s decision to expand further into the legal sector builds on its probate services regulation, which it has offered since 2014. Since then, 280 firms have been approved by the Institute to provide services.
If ICAEW is successful with its application, the body will become the first legal regulator and licensing authority to regulate all six reserved legal activities and the second approved regulator for notarial services since 1533. As per the timeline revealed on its website, ICAEW expects to be in a position to authorise firms and license ABSs within 12 months but that does depend on the LSB’s own timetable.
James envisages that the ICAEW could start taking applications from January next year.
Is this something that you'd be likely to take up? What effect do you foresee this having on the profession and the services some firms offer? Do you expect medium to large firms to introduce a new position in their firm to strategically leverage these services?