Market leading insight for tax experts
View online issue

Legal professional privilege: lawyers welcome ‘certainty’

printer Mail

The question whether legal professional privilege should be extended to tax advisers who are not lawyers looks likely to become one that will have to be considered by Parliament, said the ICAEW’s Chief Executive Michael Izza.

Taxpayers should be able to go to the adviser best qualified to give the advice being sought, without being influenced by the availability or otherwise of legal professional privilege, the Chartered Institute of Taxation said after the Court of Appeal rejected the Prudential’s argument that LPP extends beyond lawyers to other professional tax advisers.

Izza wrote in his ICAEW blog: ‘For centuries lawyers have been able to provide tax advice to clients using LPP. That is, they do not need to disclose the affairs of the client to the authorities, ie. HMRC.

'But the argument is that we as chartered accountants overwhelmingly provide the majority of tax advice; we are as well qualified to advise on tax as lawyers; we operate to equivalent professional and ethical standards but nevertheless we are not covered by LPP.’

But the decision in R (on the application of Prudential plc and another) v Special Commissioner of income tax and another, [2010] EWCA Civ 1094, was welcomed by the Law Society as ‘giving certainty to solicitors and their clients’.

Its President, Linda Lee, said: ‘The Law Society supports the Court's view that it is a matter of public policy what the bounds of LPP should be. If LPP is to be extended beyond the advice of the legal professions it must be done via statute that clearly defines the limits and conditions of any extension both as to the areas of law or the professional adviser to ensure certainty as to the scope of its application.’

Heather Gething, a Partner at law firm Herbert Smith, said the ruling was ‘a reassuring confirmation of the status of legal professional privilege’. Her colleague Julian Copeman said: ‘This is an important decision as it both confirms the unique status of legal professional privilege and the necessity of keeping it within clear boundaries.  It is well reasoned, robust and compelling.’

Ashley Greenbank, Head of Corporate Tax at Macfarlanes, warned that ‘there is now a material risk that if the accountants lobby for a level playing field between the two professions, the outcome will be restrictions on the scope of privilege afforded to lawyers who give tax advice’.

Any such move could ultimately leave businesses as the big losers, he claimed, ‘if their ability to receive confidential commercially sensitive advice is undermined yet further’.

Alan Dolton, Tax Journal Cases Editor, will report on the Court of Appeal's decision in the 25 October issue.