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Legal advice, privilege and accountants

R (on the application of Prudential Plc and another) v Special Commissioner of Income Tax and another [2013] UKSC 1

We review the latest developments regarding legal professional privilege and the accountancy profession following the long awaited Court of Appeal decision in R (Prudential) v Special Commissioners of Income Tax.


Prudential started life over three years ago as a judicial review to the High Court by Prudential Plc and Prudential (Gibraltar) Limited (together “Prudential”) of notices with which they were served in exercise of HMRC’s investigatory powers in order to investigate a commercially-marketed tax avoidance scheme. Prudential argued that the notices sought material that was covered by legal advice privilege (“LAP”), as it comprised communications between client and accountant for the purposes of obtaining skilled professional advice on tax law. HMRC did not accept this and countered that Prudential was asking the Court to extend the ambit of LAP to create a new right to protection from disclosure.


The Supreme Court rejected Prudential’s arguments by a majority of five to two. Giving the lead judgment for the majority, Lord Neuberger refused to go against the long-standing and universally accepted limits of LAP and extend it beyond communications between clients and their lawyers. Lord Neuberger was concerned about the uncertainties that would follow from changing the scope of LAP, not least in knowing who could claim it, whether their professional work ordinarily included giving legal advice and how the Court should deal with written advice that was partly legal advice and partly other advice. He felt that the matter should be left to Parliament and not be resolved by the Courts.

The minority of the Supreme Court focused on the function of LAP and its character and context, rather than the identity of the professional giving it. In this way they did not consider that LAP would be extended to cover legal advice given by accountants; rather, the Court would simply be recognising that accountants gave skilled legal advice as part of their work, to which LAP naturally attached.


Whilst the lower courts had some sympathies with Prudential’s arguments to extend LAP and “level the playing field” between accountants and lawyers, the Supreme Court has returned firmly to the status quo and left any changes to Parliament alone.

Accountants should consider carefully the extent to which their conduct in providing legal advice and the privileges afforded to them differ from those of lawyers. It may be prudent to make clients aware of these limits at the outset in order to prevent difficult situations or complaints in the future. It is also worth noting the limited extent to which advice given by accountants to their clients will be protected from disclosure. Until further notice, it seems clear that accountants will generally be required to provide such information and documents as HMRC or others may require in keeping with their professional guidance and obligations.

For further information contact Jonathan Hyde, Senior Associate on +44 (0) 20 7280 8927 or email jonathan.hyde@dwffishburns.co.uk

By Jonathan Hyde

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.