WHILE the Supreme Court’s ruling on legal professional privilege is a hefty blow to accountancy’s aspirations to deliver privileged tax advice to their clients, it seems safe to say that all is not lost.
While most expected today’s ruling not to extend the privilege to non-lawyers, it does not in any way satisfy any of the pre-existing issues. There is still an anomaly, meaning a client can receive the same advice from both his or her lawyer and accountant, only to find just their lawyer’s advice is privileged.
The basis of the ruling is that extending the scope of the privilege would be to introduce uncertainty over how far the privilege can apply, and inconsistency in its application. Not only that, but it has been interpreted like this since the 1600s.
Be that as it may, we still have uncertainty and inconsistency today. Nothing has been solved.
However, the strength of accountancy’s case did not go unnoticed, with Lord Justice Neuberger noting just that in his judgment. Indeed, he conceded it is “hard to see why, as a matter of pure logic, that privilege should be restricted to communications with legal advisers (sic) who happen to be qualified lawyers, as opposed to communications with other professional people with a qualification or experience which enables them to give expert advice in a particular field”.
Despite having recognised this, the ruling still falls in line with the previous 400 years of legal precedent, maintaining it is “universally believed that legal advice privilege only applies to communications in connection with advice given by members of the legal profession”.
In addition, the ruling holds, any extension of that privilege would lead to a situation where it is unclear which occupations would be members of privileged professions, expressing further concern over how a court might determine whether a group could constitute a profession.
While those complexities could conceivably be ironed out, the court felt it was not its jurisdiction to alter a point of government policy such as this, instead laying that responsibility at Parliament’s door.
The consequences of extending privilege, the judges felt, should be considered through the legislative process due to its wider powers of enquiry and democratic accountability, adding that such an extension in this case might only be appropriate on a “conditional or limited” basis, which cannot adequately be considered or imposed in the courts. Worryingly for those who would like to see the privilege broadened, Parliament has legislated on the basis of the status quo several times. Any change to the privilege could, then, entail changes to various other laws.
Despite that, the door to further pursue the extension of the privilege through representations to Parliament remains open to bodies such as the ICAEW, should that, as seems likely, be their wont. The battle has been lost, but the war is far from over.
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