What is ‘basis period change'? Currently, self employed partners in law firm partnerships pay income tax on their share of profits for the accounting period ending…
Alongside the inevitable business concerns you will have in these uncertain times it remains vital that law firms maintain the integrity of their client money systems and meet their compliance obligations.
The SRA have provided some guidance on their website on Accounts Rules compliance regarding client account reconciliations, banking client account cheques and the deadline for completion of the annual Accountant’s Report here.
Firms should consider whether, in their particular case, the current physical remoteness of support staff, fee earners and partners and any changes that have had to be made to staff responsibilities, increases the risk of being able to maintain accurate client account records and/or of breaches occurring.
Proper review processes remain crucial.
Accountant’s Report filing deadlines
As it states in the guidance the SRA will take a pragmatic approach where the Accountant’s Report is completed late as a result of the impact on the firm of the coronavirus pandemic, but it is important to consider:
- This should not be viewed merely as an ‘automatic deadline extension’. Firms should be making their best endeavours to avoid any delay. Speak to us (or your own reporting accountant) sooner rather than later if you believe there will be problems in meeting the deadline
- The deadline is relevant even where the report is unqualified and therefore not filed with the SRA
What should be remembered is that the annual external report is a key part of the overall regulation in place to ensure the protection of client money. Delays in any part of the review processes can increase the risk of either errors occurring or the misuse of client money. If the review work is delayed it could mean that possible serious breaches or system weaknesses that the partners (who are jointly and severally liable for compliance) are unaware of continue longer term with an ongoing risk to client money.
To find out more please contact Janet Taylor.