City of London Law Society voices concerns

The City of London Law Society (CLLS) has reached out to the Lord Chancellor, the Rt Hon David Lammy MP, to address ongoing worries about the potential implementation of new National Insurance Contributions (NICs) on solicitors operating through Limited Liability Partnerships (LLPs). CLLS Chairman Colin Passmore highlights that while the legal profession is supportive of the Government's intentions to create a fair and effective tax system, any measures that uniquely target LLPs could lead to considerable unintended consequences. These effects might encompass internal restructuring, alterations to partnership models, or even decisions to relocate specific functions overseas, all of which would strain the stability of the profession and undermine the UK’s status as a global legal hub.

Colin Passmore, Chair of the City of London Law Society, said “We fully support the principle of a fair tax system. Our concern is that any National Insurance reform that disproportionately impacts LLPs could disrupt a structure that is integral to how the legal profession operates. The LLP model is central to professional standards, governance, and client accountability. We therefore want to ensure that the issues we have highlighted are properly understood within Government as policy discussions continue.”

Mr Passmore also acknowledged recent signals suggesting that the proposals may not advance: “We are encouraged by recent indications that this proposal may not proceed. If that is the case, we would welcome the Government’s responsiveness to the serious concerns raised by the profession. Clarity on this point would be extremely helpful to avoid unnecessary uncertainty across the sector.”

Additionally, the letter stresses the pivotal role of English law in bolstering the UK’s economic and international reputation. English law plays a critical role in global business transactions, supports leading financial markets, and significantly enhances the UK’s soft power and economic influence. The CLLS is keen to support the Government's commitment to elevating the profile and accessibility of English law on the global stage and has an active interest in contributing to the newly proposed English Law Panel.

Mr Passmore added “We support the Government’s ambition to strengthen the international reach of English law. The City’s legal community stands ready to assist, and we would welcome the opportunity to engage with the Lord Chancellor and his officials to provide any further insight that may be helpful.” To further discuss these matters, the CLLS has proposed a meeting with the Lord Chancellor, along with the Chair of its Tax Committee, to explore any technical considerations pertinent to future policy decisions.