Prudential loses legal privilege appeal
The Court of Appeal quashed accountants’ hopes of being granted legal privilege for their tax advice in a decision in the Prudential v HMRC case handed down on Wednesday.
Rejecting the arguments put forward by lawyers representing Prudential and PricewaterhouseCoopers as well as the ICAEW, Lord Justice Lloyd decided that the scope of legal professional privilege was something for Parliament to decide rather than the courts. The fact the law has not been altered by Parliament was not an accident, the judges concluded.
ICAEW chief executive Michael Izza said in his blog he was disappointed with the decision.
“For centuries lawyers have been able to provide tax advice to clients using LPP,” he argued. “Taxpayers should be able to seek advice from those they believe are best suited to provide that advice, whether that be from a lawyer or a professionally qualified chartered accountant.”
The institute will now take stock on what to do next in its campaign to extend LPP to tax advisers. “Ultimately though, it is looking more and more likely that this is a question that will have to be considered by Parliament,” Izza wrote.
The Prudential case ended up being more of a confrontation between the Law Society and the ICAEW that the parties named in the original case, which was prompted when Prudential sought a Judicial Review for HMRC information notices issued under section 20 of the Taxes Management Act 1970 (TMA 1970 - now superseded by s36 of Finance Act 2008). Prudential argued that it should not have to disclose the documents in question, which it said were subject to LPP.
Herbert Smith, which advised the Law Society, has published an analysis setting out the main arguments and the judges’ conclusions.