Gove poised to introduce “lawyers’ levy”

Top City law firms are likely to see themselves facing a new compulsory tax: a planned 1% tax on profits that is becoming known as the “lawyers’ levy”.

As part of his justice reforms, Lord Chancellor and Secretary of State for Justice, Michael Gove, is aiming to scrap the highly controversial criminal courts charge and replace it with a 1% charge on the profits of the top 100 corporate law firms.

On Wednesday 21 October 2015 the House of Lords voted 132 to 100 in favour of scrapping the court charge.  Consequently, Gove is now under more pressure to implement the change.

The vote was tabled by Labour MP Lord Beecham, who put out a plea before the debate, saying: “Among the many dubious legacies bequeathed to Michael Gove by his predecessor, perhaps the most misconceived is the criminal courts charge. I only hope that Mr Gove, who has abandoned one ill-conceived project of Mr Grayling’s, will do the sensible thing and urgently revise these deeply flawed regulations.”

Dubbed a “tax on justice”, the charge has been a sore point in the relationship between the justice system and the government since its introduction in April by Chris Gayling under the Coalition. According to The Times, over 50 magistrates have resigned over the issue.

The fee is mandatory and starts at £150 rising to £1000. If a defendant pleads innocent but is then convicted the charge is far higher. Critics argue that poor but innocent defendants will be more likely to plead guilty, through fear of the charge.

Gove has been in conversation with Treasury officials who have demanded that the £90million revenue from the criminal court charges must be replaced through other means before they can be disposed of.

If introduced, the levy would raise an estimated £190 million in revenue - more than double the figure raised from the court charge.

Recently, he reiterated that the justice system must redress its “indefensible inequalities”, suggesting that the levy would be a method to achieve this.

When the plan was first revealed in June, Gove spoke to the Legatum Institute, a business think tank, and said: “those who have benefited financially from our legal culture need to invest in its roots.”

“More could – and should – be done by the most successful in the legal profession to help protect access to justice for all.”

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