Legal advice, privilege and accountants
R (on the application of Prudential Plc and another) v Special Commissioner of Income Tax and another  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.
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.