The playing field between lawyers and accountants remains decidedly skewed
when it comes to providing tax planning advice, according to accountancy
The barb has been aimed after insurance giant Prudential lost a High Court
battle against the taxman in which it attempted to have accountants’ advice made
confidential under Legal Professional Privilege (LPP).
As efforts continue to bring vital revenue into the UK’s coffers, the outcome
could also mean the taxman will ramp up demands for accountants to disclose the
advice they have provided to clients.
Prudential has been left to lick its wounds, but an appeal may be on the
cards. “We are reviewing the decision with our advisers and a decision as to
whether or not appeal will be made in due course,” a spokesman said.
This has spurred accountancy bodies to make renewed calls for change. John
Whiting head of tax policy at the Chartered Institute of Taxation said: “CIOT
believes there must be a level playing field. Tax advice should be treated the
same no matter who gives that advice, whether they are lawyers or accountants.
Ultimately we think this needs to be looked at by the Supreme Court.”
The ICAEW flagged up the fact that the High Court considered that the case
for extending LPP had not been made despite conceding “in modern conditions
accountants have the expertise to advise on tax law and it is firms of
accountants, rather than firm of solicitors, who do give such advice and
represent clients in disputes with the Revenue on many aspects of their tax
Prudential forced the issue into the High Court on a matter of principle
believing the taxman should not be entitled to see professional advice outside
of a formal litigation process.
The taxman will be reluctant to give up the right to comb through the advice
given by accountants given its efforts to combat aggressive tax planning. This
is recognised by the institutes but the inconsistency between lawyer and
accountant advice is still a “major irritant”, the ICAEW added.
“It is quite right that there should be a balance between the right of the
state to know and the right of the taxpayer to his privacy. A major irritant in
this balancing act between public information and privacy for the taxpayer is
that LPP only generally applies to advice that is obtained from lawyers.”
Chas Roy-Chowdhury of ACCA warned the issue could take up to three years to
resolve and could go to Europe for a final ruling, adding: “It’s not appropriate
to treat two parties differently who are ultimately providing the same advice.”
IN OUR VIEW
The natural tension between confidentiality and openness is patently
clear and accountants find themselves stuck in the middle. Those who are
providing legitimate advice deserve some confidentiality in return for their
MTD represents 'the single most significant change to the UK’s system of taxation in recent times', says Knill James partner Nick Rawson. So, how prepared are SMEs for digital tax reporting?
The SME community voices concern about the chancellor's measures in the Spring Budget
Following chancellor Philip Hammond’s Spring Budget speech, we explore the key takeaways for businesses and individuals
Unincorporated businesses under the VAT threshold given an extra year to prepare before MTD becomes mandatory