Legal Practice Accounting
UK law firms must comply with Solicitors Regulation Authority (SRA) Accounts Rules, which mandate strict separation of client and office money, regular reconciliations, and annual accountant's reports. The complexity of trust accounting, disbursement tracking, SDLT handling on conveyancing, and VAT on legal fees — including the distinction between disbursements and recharges — creates significant compliance burdens.
Our legal practice accountants handle SRA-compliant client account management, office-to-client money transfers, three-way reconciliations, VAT on counsel fees and disbursements, partner profit allocation and Self Assessment returns, and preparation of the SRA Accountant's Report. We ensure your practice remains fully compliant while optimising partner tax positions.
What's Included
Comprehensive services tailored to your industry needs
Industry-Specific UK Expertise
Key UK Challenges
Complexities you face
- Maintaining strict separation of client money and office money under SRA Accounts Rules 2019
- Performing daily client account reconciliations and monthly three-way reconciliations
- Correctly treating VAT on disbursements vs recharges — agent vs principal distinction
- Managing partner profit allocations, capital accounts, and current account drawings
- Tracking matter-level profitability across different practice areas and fee earners
- Handling SDLT calculations and submissions on conveyancing transactions for clients
Tax Considerations
HMRC rules & reliefs
- SRA Accounts Rules — breaches can result in intervention, fines, or striking off
- VAT on legal fees — standard-rated at 20%, with specific rules for barristers' fees and court fees
- Disbursements — genuine disbursements are outside the scope of VAT; recharges attract VAT
- Partnership taxation — each partner taxed individually via Self Assessment on profit share
- LLP taxation — members taxed as self-employed, salaried member rules may apply (disguised employment)
- Corporation Tax — incorporated law firms (ABSs) subject to Corporation Tax at 25% on profits
How We Help
Our tailored solutions
- SRA-compliant client account management with automated reconciliation processes
- Preparation and submission of the annual SRA Accountant's Report (Rule 12)
- Partner Self Assessment returns with profit allocation and tax payment planning
- VAT return preparation with correct treatment of disbursements and counsel fees
- Matter-level profitability reporting and fee earner productivity analysis
- Practice financial management including working capital and lock-up day monitoring
Ready to Simplify Your Legal Practice Finances?
Get a free consultation with our industry specialists and discover how we can help your business thrive.
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