Account Rules

Question 1

What are the two primary pieces of legislation underpinning the legal regulatory framework?

Answer 1

Solicitors Act 1974
Legal Services Act 2007

Question 2

What does the Solicitors Act 1974 do?

Answer 2

Governs the rules and responsibilities of solicitors and firms.
Sets out rules for accounting requirements when dealing with client money.

Question 3

What does the Legal Services Act 2007 do?

Answer 3

Allowed creation of Alternative Business Structures.
Allowed more legal regulators.
Created a single supervisory body “The Legal Services Board”, who overseas more regulators.

Question 4

When does CILEx Regulation apply?

Answer 4

Where firms are authorised and regulated by CILEx regulation.

Question 5

What does CILEx Regulation include?

Answer 5

CILEx Code of Conduct
CILEx Regulation Licensing Rules
CILEx Accounts Rules

Question 6

What is client money?

Answer 6

Any money which is owned by anyone other than the authorised entity e.g., money held of clients or money held as trustee.

Question 7

What is office money?

Answer 7

Money belonging to the authorized entity e.g., the firm.

Question 8

What is a disbursement?

Answer 8

Any sum spend or to be spent on behalf of the client.

Question 9

What is a recharge?

Answer 9

Expense that is incurred in performing one’s service to the client and to which they client has agreed to pay?

Question 10

Is VAT payable on a disbursement?

Answer 10

No.

Question 11

Is VAT payable on a recharge?

Answer 11

Yes, output tax.

Question 12

Examples of recharges

Answer 12

Postage or rail travel costs.
Medical records sourced through an agent.
Counsel fees (can also be treated as disbursement).
HM Land Registry search fees.

Question 13

Examples of disbursements

Answer 13

Accountants fees, counsel fees, estate fees.
Medical records, sourced directly.