Legal advice privilege protects confidential legal advice from disclosure. HMRC often ‘invites’ the taxpayer to waive privilege over all pre-transaction advice in ‘main purpose’ or other avoidance disputes. The recent First-tier Tribunal decision in Conegate highlights the practical difficulties of asserting privilege, especially on a selective basis, where the taxpayer has to explain the motivations behind a transaction. In some circumstances, taxpayers may have little choice but to waive privilege, which in practice limits the protection afforded by legal advice privilege in tax avoidance cases. However, properly asserting privilege should never be seen as being ‘uncooperative’, whatever HMRC might say.
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