Accountants and lawyers prepare for epic clash

Tax advisers and accountants are up in arms because lawyers claim professional privilege means they do not have to disclose details of tax avoidance schemes to the Inland Revenue.

This belief has led the Consultative Committee of Accountancy Bodies (CCAB) to send a letter to chancellor Gordon Brown, expected to be delivered today, demanding equal treatment with lawyers.

The letter, seen by Accountancy Age, expresses the CCAB's 'extreme concern' that 'the legal profession will be put at an unfair advantage as compared to the accountancy profession'.

But the Law Society is in no mood to argue over its rights to privileged consultations with clients. 'The Law Society has told solicitors that if they give advice on tax measures it is protected by privilege and does not have to be revealed to the Revenue.'

The Law Society went on to say that it was possible the issue may only be resolved through 'test litigation'.

Patrick Cannon, a tax barrister with Rex Britten Chambers, said he was 'pretty sure' that some solicitors would use the fact that they do not need to disclose to the Revenue as a sales technique. 'I'm at the Tax Bar, so wouldn't do anything as crass,' he said. 'I will leave it to clients to work it out for themselves.'

Chas Roy-Chowdhury, head of tax at ACCA, said: 'The government has to pass legislation to give accountants the same level playing field.'

Accountancy Age understands the Treasury initially gave assurances that lawyers would be treated the same as accountants.

However, concerns have emerged that it will now renege on that promise in the face of vehement opposition from the law lobby.

A Revenue statement said discussions with the Law Society were ongoing and that it was 'confident' agreement could be reached which 'ensures the rules operate effectively as intended without requiring the disclosure of privileged information'.