As if getting divorced isn’t enough. Now England’s senior family court judge has ruled there’s a new hazard – that your lawyer will blow the whistle to the tax authorities if you haven’t paid your taxes. The judge, Dame Elizabeth Butler-Sloss (right) went further and said lawyers who failed to report tax evasion risked committing a criminal offense if they failed to report such evasion to the National Criminal Intelligence Service. What do they put on the fee note? Disbursement – Whistleblowing to the NCIS?

The ruling, which had been anxiously awaited by divorce lawyers, applies as much to the plumber paid partly in cash as to the millionaire with a string of offshore accounts. The judge warned that the effect will be to create “serious delays” in hearing family cases.

Dozens of divorce cases had been put on hold pending yesterday’s judgment. Lawyers fear there will be more do-it-yourself divorce settlements as couples seek to avoid a possible Inland Revenue investigation by not involving solicitors.

Divorce lawyers were slow to realise that the Proceeds of Crime Act, which extended anti-money laundering legislation originally targeting drug traffickers to “criminal property” generally, applied to the transfer of assets from a person to their ex-spouse on divorce.

The act makes it a crime to be involved in an arrangement which might facilitate “the acquisition, retention, use or control of criminal property” by another person – including an ex-spouse.

Family court rules, which require full disclosure of assets by both parties, often reveal some tax evasion – the fruits of which fall into the category of “criminal property”. One solicitor estimates that as many as 50% of “big money” divorce cases involve unpaid taxes.

Many divorce lawyers did not realise the act made it a criminal offence for them to negotiate a settlement or make a court application without notifying NCIS if they suspected tax evasion.

The judge said the coming into force of the Proceeds of Crime Act last February had caused “immense confusion and disruption” in family cases.

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