COVID-19 and the…
COVID-19 and the regulatory landscape for law firms
By Jamie Lane
The last month has been enormously challenging for businesses across the globe and with the professional landscape changing on a daily basis, law firms may be struggling to keep abreast of the issues affecting them.
Last week, in the midst of the chaos, the SRA quietly released some guidance for law firms to help with some common queries arising from the coronavirus crisis.
Covering practical issues such as the ability (or lack of) to attend court, client confidentiality, AML and remote working, the SRA has also looked at certain aspects of the application of the Accounts Rules that will be put under pressure in the coming weeks and months.
The importance of contingency planning is a clear message coming from the guidance and, of course, the ability to operate properly in a crisis has always been a key requirement for authorised firms. However, the SRA recognises that these are unusual times and have acknowledged that they will need to adopt a 'pragmatic approach' to their own regulation.
Looking first at the annual Accountant's Report and the fact that the six-month deadline may not be achievable for some, the SRA has stated that they will take a 'proportionate approach' where there is a good reason for a firm failing to meet this deadline. Although the SRA has stopped short of issuing a blanket automatic deadline extension, we understand that this is under regular review by the SRA and further guidance may be forthcoming. In the absence of this general extension, firms will need to consider applying to the SRA for a waiver from the six-month obligation and open communication will be important. In any event, where there are concerns around meeting the deadline, it is critical that the reasons and efforts taken to meet it are documented clearly.
Difficulties in preparing the five weekly bank reconciliations is next on the list, and the SRA has made a point of noting the expectation that a firm's contingency planning measures should ensure these still take place. That is perhaps more of a challenge for smaller firms where reliance is placed on a smaller group of individuals, but the SRA clearly wants to avoid a loosening of critical client money protection systems unless absolutely necessary.
The final point on the Accounts Rules is in respect of difficulties in banking client cheques within the usual timescales. In these circumstances the SRA expects firms to notify clients and keep them updated of the position and encourages firms to look at alternative means of receiving client money, such as electronic transfers.
We will continue to monitor guidance closely and will let you know as the position changes. If in the meantime you would like to discuss any of these issues, please speak to your usual contact at Saffery Champness. We have also set up a dedicated Coronavirus helpdesk at E: [email protected] and we will aim to respond to any questions directed here within 24 hours.
Additional guidance was issued by the SRA on 2 April 2020 to clarify some points. Read more.
Partner, Bournemouth
Articles 20 Jan 2022
Key areas of focus for charities in 2022
Articles 7 Dec 2021
The VAT land exemption simplification call for evidence: HMRC's response
The challenges and areas to navigate for businesses in 2022: part 1
Articles 10 Nov 2021
The reduced rate of VAT to end on 1 April 2022
Top tips for charity accounts preparation when applying for grants
Portugal's Golden Visa program and the special tax regime for non-habitual residents