Lawyers win Prudential legal privilege case

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The Supreme Court has refused to extend legal professional privilege (LPP) to accountants in the long-running legal case between Prudential and HMRC.

To recap, Prudential originally sought a Judicial Review of HMRC information notices concerning documents from its tax advisers that the insurance company said should be subject to LPP. HMRC won the decision before the Special Commissioners in 2009, and again at the Court of Appeal the following year.

As currently defined, LPP only applies to clients of lawyers and includes any tax advice they provide, even though the majority of tax advice is provided by accountants, the ICAEW argued. Its stance is that Parliament should amend the law to extend privilege to accountants. The lawyers, of course, were not so keen to erode their s...

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23rd Jan 2013 13:58

jobs for the boys

no privelige no responsibilities, lets go  on strike

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24th Jan 2013 09:29

If that is the case ...

Quote:
A spokesman commented: “The right to see tax advice provided by accountants plays an important role in our work against tax avoidance, helping to establish the right tax position...."

Excuse me, but if the right to see tax advice provided by accountants plays an important role etc etc, why would not the right to see tax advice provided by solicitors play any less important a role?

With kind regards

Clint Westwood

 

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25th Jan 2013 12:40

Quite

nogammonsinanundoubledgame wrote:

Quote:
A spokesman commented: “The right to see tax advice provided by accountants plays an important role in our work against tax avoidance, helping to establish the right tax position...."

Excuse me, but if the right to see tax advice provided by accountants plays an important role etc etc, why would not the right to see tax advice provided by solicitors play any less important a role?

With kind regards

Clint Westwood

 

My thoughts also. Also, here we're drifting back into the (deliberate?) conflation of avoidance and evasion. If a client's breaking the law, then it's rather different situation to one merely avoiding tax - which by definition means the 'right tax position' is already established.

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25th Jan 2013 14:19

Your comment is spot on, but fails to recognise that presumably HMRC hopes that the outcome of all these efforts to challenge why advice given by lawyers is singled out for special protection will be that all such advice is stripped of protection rather than the protection being extended to cover advice given by accountants and others. That would provide a level playing field for competition between lawyers, accountants and others, but whether it would be good for taxpayers seeking confidential advice is another matter...  

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25th Jan 2013 15:22

Privilege

matheusmith wrote:

Your comment is spot on, but fails to recognise that presumably HMRC hopes that the outcome of all these efforts to challenge why advice given by lawyers is singled out for special protection will be that all such advice is stripped of protection rather than the protection being extended to cover advice given by accountants and others. That would provide a level playing field for competition between lawyers, accountants and others, but whether it would be good for taxpayers seeking confidential advice is another matter...  

That is the other possibility, true. In which case, I'm sure MPs will not be so hypocritical as to not remove such privilege from their own files and correspondence as well.

Ooh, look at the vapour trails from that pig up there!

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24th Jan 2013 10:13

Privilege

Just to avoid any potential confusion, the Supreme Court case concerned accountants and common-law legal professional privilege (which, the court confirmed, is available only to lawyers).

This is quite separate from the statutory exception to the obligation to report suspicions of money laundering under MLR 2007 / s330 PoCA 2002 which applies to information received by lawyers and by accountants (who are members of a qualifying professional body) in relation to information received in "privileged circumstances" (as defined in PoCA 2002).  This statutory exception remains in effect.

David

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24th Jan 2013 11:03

The point of principle which the Supreme Court found (if my understanding of their judgment is correct) is that there is no reason in principle why legal advice received from a lawyer should be privileged but the same advice offered in identical circumstances by an accountant should not - except that that is what the legal position has always been understood to be (for centuries) and if that is to be changed the change should be made in Parliament, not in the Supreme Court.

None of the Supreme Court judges found that it would be, if you like, morally 'wrong' to extend privilege to cover accountants (and some other professionals).  But there might need to be some safeguards and the details of how privilege should be extended would need to be carefully thought about and spelled out.

That, they felt, was a job for detailed legislation from parliament - not something to be done on a haphazard basis through is series of court judgments (and appeals).

Of course legal privilege operates in favour of the client and, except in rare cases, that client will not be the Crown itself - the likelihood is that the Crown's powers will be inhibited by the privilege.  So there may not be great enthusiasm on the part of the government to bring legislation to parliament which would extend the scope of privilege to reflect the fact that 'legal advice' is often nowadays provided to clients by professional people who are not lawyers.

David

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25th Jan 2013 12:35

Interesting Consequences

I see what David is saying - perhaps my first reaction of "Lawyers in decision to retain lawyers' privileges shock!" might have been unfair.

Yet if parliament is to legislate (and they probably should here) then it will inevitably raise the question of which accountants should be afforded such privileges? The qualified vs unqualified debate raise its head yet again - will it just be the CCAB qualifieds? Anyone registered for MLR with HMRC or other approved bodies? Could this even nudge us down the road towards state regulation, on the basis that if we want special favours from the state, then there has to be a quid pro quo?

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25th Jan 2013 13:01

Legal privelege,..

Maybe they should extend it to cover only tax advice given by tax professionals that are members of the CIOT.

No reason for unqualified (in terms of tax) accountants or solicitors for that matter to be given it on tax advice if they are not suitably qualified to give the advice.

Maybe the CIOT should have got it's oar in here and spoken up for tax specialists so that more people presenting themselves as tax advisors are forced to struggle through the exams to get the CTA qualificiations. (I am very aware that many people are qualified by experience, or dual qualified , etc, and are much more capable than me!).

Just a thought whilst I pile through the seemingly endless last minute Returns!

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25th Jan 2013 13:37

Legal Privilege - Did we really think..

Legal Privilege - Did we really think that the legal profession would give us the time of day! We must be kidding. So if we want to give tax advice in future, change profession - become a wolf in sheep's clothing and become a solicitor or barrister.

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25th Jan 2013 13:56

The answer

Apparently if You are a chartered accountant ie  FCA or ACA only and you apply to the Law Society and the application has the backing of 3 qualified solicitors you can become an honorary member to practice tax law only but are covered by the privelage then...so this seems to be the answer

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25th Jan 2013 17:58

CIOT were there....

Could I just pick up Ian McTernan's comment about the CIOT getting involved. In fact we have been involved in all stages of the Courts' litigation and have supported the ICAEW throughout the process. We did start the process of also formally intervening but it was clearly better for us to work with the ICAEW and so have a single composite case. Our various submissions and comments, including those to the Supreme Court, were careful to explain the qualifications and responsibiltiies of CTAs together with our basic view that privilege should attach to the advice, not the adviser, and that it is surely in everyone's interests that there is a clear and proverbially level playing field as far as tax advice is concerned.

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26th Jan 2013 14:57

Personally I think that the privilege should be removed from lawyers in the case of providing advice in the course of tax planning. It should remain only where they are giving advice in relation to legal matters.

That may draw a simple line, but as the judges said, Parliament should spend the time to align based on the advice, not the advisor.

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