Why Your Business Should Hire a Tax Lawyer

Most businesses are well versed in the benefits of an accountant, and happily engage accounting assistance come tax season. However, fewer businesses know when to consider hiring a tax lawyer. After all, accountants manage annual tax returns and a business’ day-to-day records and accounts. While both accountants and lawyers can offer advice regarding tax benefits and penalties, tax lawyers are able to take your unique circumstances into account in order to ensure that your broader needs are both tax compliant and tax efficient. More generally, this means that tax lawyers focus more on the ‘big picture’ of your tax health, engaging in areas such as tax planning and management of audits and disputes. While a tax lawyer is the person to engage when things ‘go wrong’, engaging a tax lawyer is also a preventative measure.  

Can You Hire Both?

If you are particularly prudent, you may wish to obtain advice from a tax lawyer before lodging your tax return. This is often the best time to engage a tax lawyer, as it operates pre-emptively against any potential negative outcomes. This can also help ease any concerns you have over potential errors or omissions, which often carry heavy penalties. While you may seek advice from a tax lawyer after your accountant has organised your tax return, it is also common for accountants and tax lawyers to collaborate regarding your matter. Seeking assistance from both professionals is particularly important if you run a complex business structure or you are self-employed. The golden standard would be engaging both an accountant and a tax lawyer in advance of lodging your tax return.

When Is a Tax Lawyer Needed Most?

You may feel that you have a good grasp on your tax return needs, and choose not to engage a tax lawyer prior to tax lodgement. If this is the case, when else might you need to seek advice from a tax lawyer? It is common practice – and important – to hire a tax lawyer during big changes to your business. These big changes include:

• buying or selling a business;
• starting a new business;
• closing a business; or
• winding up or insolvency of a business.

It is also common to engage a tax lawyer on the heels of taxation office decision or audit, particularly if the need for negotiations or representation may eventuate. A tax lawyer can appeal and appear on your behalf in these circumstances, and assist you in lodging a tax objection. In the event that there is a question of criminal proceedings, the need for an experienced tax lawyer becomes most apparent. However, engaging a tax lawyer prior to lodgement can greatly decrease your chances of experiencing adverse outcomes. This is because a tax lawyer can better make you aware of your obligations, explain the operation of the law in relation to your particular circumstances, and outline possible penalties. There can be a lot on the line with submitting tax returns, particularly this year, where you may have taken advantage of various tax breaks in the form of COVID-19 government assistance. As such, prior to your accountant’s lodgement of your tax return, engage an expert second set of eyes in the form of a tax lawyer to assess your tax return.

About the author – Butlers Business Lawyers Newcastle and Sydney are a team of commercial and business solicitors providing tailored legal services to individual business circumstances.