BSB Barristers Entity regulation

In December 2014 the BSB announced proposals for barrister entity regulation.

The opportunity to trade as an entity, be it a limited company, partnership or LLP will be attractive to some barristers as it provides the opportunity to trade as a corporate structure.  This could be especially attractive for sets wishing to provide services direct to other organisations or to respond to developments in legal aid.

The BSB also visualises the scheme will be of interest to single person entities.  However the benefits are far from clear.   It may be of initial interest to individual barristers because they may believe there will be tax advantages; indeed some may be told by their accountants that there could be.  The main tax advantages of corporate entities, in particular limited companies,  arise where a significant element of the profits earned are to be retained in the business; for example to finance new investment in IT or perhaps premises.  For individual barristers earning very high levels of income such a route may well be attractive.  Most barristers however earn relatively low levels of profit and few are in a position financially not to draw all of these profits out.   For anyone in this position, and this will be the majority, the benefits of trading as a limited company are likely to be minimal.

For any barrister who is actually a member of chambers single person entities are likely to be highly problematic for his or her chambers.  In particular, at present, any member who fails to pay his or her rent can be pursued for payment.  Any member trading as a limited company may need to provide a personal guarantee to their chambers.  Also, chambers may find their culture changes if their membership becomes a combination of individual members and members trading as limited companies.  The culture may change.

We believe that Chambers should review their constitutions and they may well wish to amend them to only allow members to be individuals and to specifically exclude corporate members.

This is an area on which most chambers will need advice.

Click here: BSB-entity-regulation for Ian Dodd’s latest article on the issue.

For more details on the BSB website click here.