Recent clarification from the Solicitors Regulation Authority (SRA) on the provision of tax advice has prompted renewed discussion across the legal sector.
Having undertaken discussions and research with trusted advisors, as well as colleagues working across adjacent professional sectors, we thought it would be helpful to share some of the key themes and risk considerations emerging from those conversations.
While much of the early focus has centred on SDLT and conveyancing work, the reality is that the implications are far wider and firms may need to take a more holistic view of their risk exposure.
Not just a conveyancing issue
It is understandable that residential property work has been front and centre in conversations around tax advice, particularly given the complexity of SDLT. However, many other practice areas routinely intersect with tax considerations, sometimes less obviously.
These can include:
- Private client and probate matters
- Family law, particularly financial settlements
- Corporate and commercial transactions
- Trusts and estate planning
- Employment advice on termination payments and benefits
- Dispute resolution, where settlements may carry tax consequences
In practice, this means that the issue is not confined to one department it cuts across the firm.
Clarity of scope is key
One of the most important risk controls available to firms is clarity. Engagement letters and client communications should accurately reflect:
- What advice is being provided
- What is outside scope
- Where specialist tax input may be required
Ambiguity in this area can lead to misunderstandings, particularly where clients assume that legal advice includes tax advice by default.
From a professional indemnity perspective, this is often where issues arise—not necessarily from the advice itself, but from a mismatch between expectation and delivery.
Documenting decisions and rationale
Another key consideration is the ability to demonstrate how and why decisions were made.
Where matters involve tax considerations, firms may wish to ensure that:
- The distinction between legal and tax advice is clearly understood internally
- Decisions are supported by a clear rationale
- File notes evidence the basis on which conclusions were reached
In the event of a claim or regulatory scrutiny, a well-documented audit trail can be as important as the advice itself.
Regulatory communications still matter
Firms should also take the opportunity to review their client-facing regulatory information, including transparency disclosures and so-called “Rule 2” communications, to ensure they remain accurate and aligned with current practice.
While this may seem administrative, inconsistencies between what firms say they do and what they actually do can create avoidable risk.
An evolving risk landscape
The SRA’s position serves as a useful reminder that the boundaries between legal advice and other forms of professional advice are not always clear-cut.
For firms, the key is not necessarily to do more, but to be clearer about scope, process and decision-making.
From an insurance standpoint, any change in how a firm approaches tax-related matters may also have implications for its risk profile. As always, open dialogue and regular review are essential.
This article is intended to highlight risk and insurance considerations only and does not constitute legal or regulatory advice. Firms should seek independent advice where appropriate.