There’s been a lot of news over the past month so we’ve gathered together some interesting stories you might have missed in one place.
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Do Conveyancers need to register as Tax Advisers with HMRC?
Conveyancers have raised concerns over the lack of clarity regarding new rules that require them to register as tax advisers with HM Revenue & Customs (HMRC).
The requirement to register centers on the submission of stamp duty land tax (SDLT) returns, which HMRC defines as tax advice. HMRC guidance explicitly states that businesses must register even if helping with tax affairs is not their primary function or if they do not view themselves as tax advisers.
A joint statement from the Society of Licensed Conveyancers (SLC) and the Bold Legal Group (BLG) highlighted specific confusion surrounding whether outsourcing SDLT work could exempt a firm from registration. HMRC indicated they do not currently agree with the view that outsourcing removes this obligation, though they have allegedly ignored repeated requests for clarification on the matter. The SLC and BLG noted that even when outsourcing, firms often still handle HMRC payments, which carries its own risks and uncertainties regarding liability and principal agency.
An HMRC spokeswoman confirmed that all tax advisers interacting with HMRC on behalf of clients for payment—including conveyancers submitting SDLT returns—will be required to register. Furthermore, a statement from HMRC indicated that receiving payment from a client for tax work is a crucial factor in this requirement. HMRC intends to publish detailed guidance shortly to support businesses through the process.
The new rules will come into force on 18 May, giving advisers a three-month window to apply for registration. Failing to register could result in a formal notice to cease providing tax advice, alongside a potential temporary or permanent ban from registering in the future. Further clarification is also being sought regarding whether conveyancers acting for mortgage lenders will need to register, based on interpretations of the UK Finance Lenders Handbook.
Backlash to use Client Account interest to fund Justice system
The legal sector has heavily criticized Ministry of Justice proposals to redirect interest earned on lawyers’ client accounts to fund the justice system. The proposed Interest on Lawyers’ Client Accounts (ILCA) scheme aims to support a more sustainable justice system, but regulators and barristers have warned of significant unintended consequences. Both the Solicitors Regulation Authority (SRA) and the Bar Council have expressed concern over the scheme’s impact.
The SRA noted that implementing the scheme could require major changes to existing rules, particularly regarding how firms return a “fair sum” of interest to clients. The regulator warned that the scheme could increase operational complexity and costs for law firms, with many consultation respondents indicating these administrative burdens could be passed on to clients via higher fees. Smaller firms are considered especially vulnerable, raising fears about their financial stability and a potential reduction in access to legal services.
The Bar Council took a stronger stance, calling the proposals fundamentally flawed and “overly broad”. They argued that the scheme risks undermining access to justice, particularly for legal aid firms that already operate under sustained financial pressure without profit. The Bar Council also strongly opposed applying the scheme to damages held for clients or funds managed for vulnerable individuals lacking financial capacity.
Additionally, critics have highlighted a lack of clarity regarding how the generated funds would be utilized. The Bar Council stressed that any collected funds must be strictly ringfenced for legal aid and access to justice, rather than replacing overall justice funding elsewhere. While both the SRA and Bar Council plan to continue engaging with the Government, they are urging ministers to carefully evaluate the broader impacts on clients and the justice system before proceeding.
26% of law firms shut for accounting breaches
Over a quarter of the law firms closed by the Solicitors Regulation Authority (SRA) last year were shut down due to breaches of accounting rules. Between September 2024 and 2025, the SRA closed 11 out of 42 firms (26.2%) for accounting breaches, while another 12 firms (28.6%) were closed for suspected dishonesty. While the absolute number of firms closed for accounting breaches remained the same as the previous year at 11, it made up a higher percentage of total closures compared to the previous year’s 18.6%.
The SRA uses interventions to temporarily or permanently shut down firms to protect clients’ interests and funds. During an intervention, the regulator can seize money and documents, launch investigations, and suspend lawyers’ ability to practice. Recently, the SRA intervened in the collapsed Sheffield firm PM Law over potential fraud and the misappropriation of client money, taking possession of all files and client funds.
Common accounting breaches include mixing business funds with client funds, which are legally required to remain segregated. Other violations involve borrowing money from client accounts for working capital, holding onto client funds longer than necessary, improperly withdrawing client monies, and incorrectly handling the interest earned on those accounts.
The SRA has adopted a significantly tougher stance on the handling of client funds following the £66m collapse of Axiom Ince in October 2023. Mark Turner, a partner at Lubbock Fine, noted that the regulator is now scrutinizing client accounts and allegations of dishonesty in far greater detail. While vigilant firms can improve their chances of a problem-free audit, Turner warned that the SRA will readily cut firms down to prevent client loss if they believe money is at risk.
Kings Speech announced for May 13
The King’s Speech is scheduled to take place on 13 May, setting out the government’s plans and proposed legislation for the upcoming 12 months. This event accompanies the state opening of parliament and provides an indication of the government’s policy direction for the parliamentary year ahead.
The upcoming speech will mark the third one delivered by King Charles. It is expected to feature a raft of new legislation and updates on ongoing Bills.
Notably absent from the legislative agenda will be the Audit Reform Bill. Plans for this bill have been abandoned as the government pivots its focus toward reducing red tape..
The government intends to utilize the next 12 months to outline key legislation while avoiding the addition of new constraints for businesses through the previously anticipated audit reforms.
Barrister self reports to BSB over AI hallucinated cases
An unregistered barrister, Layla Parsons, reported herself to the Bar Standards Board (BSB) after submitting artificial intelligence (AI) hallucinated authorities to the High Court. Acting as a lay advocate for a litigant in person during a case concerning the welfare of four children, Parsons cited four non-existent cases generated by an unnamed AI tool.
Although she withdrew the applications and self-reported—an action the judge called “responsible”—Recorder Howard decided to name her in his ruling. The judge noted that Parsons has offered paid legal work to the public and concluded that she failed to fully grasp the seriousness of not checking her citations. Evidence suggested she was the lawyer available to individuals purchasing documents and legal support from an unnamed website, meaning she could offer future legal services to the public.
The judge determined that the public interest in naming Parsons to warn future clients strongly outweighed the risks to her family life, which she argued included potential harassment. He dismissed her concerns as “likely to be greatly exaggerated”. Despite her legal qualifications, the judge treated Parsons as a litigant in person but emphasized that they also hold a strict duty not to mislead the court.
The judge absolved her of intentionally misleading the court but expressed concern that she minimized the seriousness of her actions by asserting that criticizing AI use could discourage access to justice for disabled litigants. Recorder Howard highlighted the incident as a prime example of the dangers of AI hallucinations leading self-representing individuals to mislead the court when they fail to verify citations.
Zombie Companies – when survival becomes a liability
Zombie companies—businesses that can service debt but cannot reduce it or invest—have become a significant legal and restructuring risk point. Proliferating in the low-interest, post-pandemic environment, these companies sit between formal insolvency and commercial underperformance, presenting challenges regarding creditor protection and director conduct. Recent economic pressures like rising inflation are expected to increase the number of these companies, with high-profile examples of repeated restructuring seen in brands like Debenhams, Poundland, and Quiz.
For insolvency practitioners, the legal exposure of zombie companies centers on whether earlier intervention could have preserved value. The deterioration of these businesses is often gradual, masking deeper structural unviability until working capital is depleted and restructuring options are severely limited. Warning signs like HMRC arrears and a reliance on short-term funding often appear long before formal insolvency.
This gradual decline shifts the legal focus to director conduct, particularly concerning wrongful trading under the Insolvency Act 1986. Directors must consider creditors’ interests when insolvency becomes probable; continuing to trade without a credible turnaround plan creates legal exposure. Courts will closely examine if directors maintained financial information, sought early professional advice, and minimized losses; failures can lead to misfeasance proceedings or director disqualification.
Zombie companies also create risks for creditors who continue to trade with distressed counterparties, facing non-payment and legal challenges. Insolvency practitioners may challenge transactions made prior to insolvency, such as preferences or transactions at an undervalue, to maximize estate returns. Furthermore, the failure of a zombie company can cause supply chain contagion, requiring creditors to carefully evaluate contractual protections and enforcement decisions.
The UK insolvency framework provides tools like administration and company voluntary arrangements to address these businesses, but the core challenge lies in the timing of their use. Intervention is often delayed due to director optimism or a lack of trigger points, leading to debates over whether policy changes should force earlier engagement. Ultimately, handling zombie companies relies on directors, creditors, and advisers recognizing the tipping point from survival to liability before value is irretrievably lost.
Clients expect Lawyers to give them “at least weekly updates”
Recent research indicates that a vast majority of legal clients have high communication expectations, with 88% demanding “at least weekly updates” and 83% expecting same-day responses to their queries. A report by the Law Firm Marketing Club, based on 642 UK consumers, found that while law firms generally met service expectations, they fell short regarding price. Price emerged as the primary source of friction, though researchers noted that better communication and clearer pricing could help mitigate this issue.
The study revealed a generational divide in client preferences and satisfaction. Younger clients aged 18-29 placed a higher importance on digital accessibility, such as 24/7 access (expected by 66% overall) and website online chat (expected by 59% overall). Conversely, older clients, particularly those over 60, were much more likely to rate their lawyer’s communication as ‘superb’ or ‘very good’.
Client priorities also shifted depending on the nature of their legal needs. For instance, those seeking business advice placed significantly higher importance on a firm’s approach to sustainability and diversity compared to clients dealing with personal matters. Additionally, just over half of all clients (52%) expected their lawyer to dress formally in a suit.
Ultimately, establishing long-term relationships through proactive communication is key to securing repeat business; while 90% of clients are willing to reuse a firm, only 56% actually have. Community manager Laura Lack emphasized that while client expectations haven’t drastically changed, they have become clearer, requiring firms to balance digital tools for younger demographics with the direct, human reassurance favored by older clients.