Client fears confirmed.

The Home Office has admitted accountants’ client confidentiality will have to be compromised as a result of anti-fraud legislation due to be announced in yesterday’s Queen’s speech.

Officials made the admission following revelations about the new laws in last week’s Accountancy Age.

A Home Office spokesman said: ‘Client confidentiality will have to be compromised in some cases. Priorities have to take precedence. The priority of deterring crime will mean information will have to be released.’

The government’s drive to crack down on money laundering will lead to the introduction of a raft of new legislation, including fuller use of taxation powers, the extension of civil forfeiture powers and of the definition of an indictable offence. This, accountants say, will damage relationships between financial service providers and their clients.

‘It is not good for police or accountants to pool resources if clients no longer consult accountants. It could be an offence not to report a minor theft,’ said one source.

The proposed National Confiscation Agency is expected to come under the aegis of the National Criminal Investigation Service. Home Office Minister Charles Clarke said in June: ‘At home we are tightening up money laundering laws and introducing a National Confiscation Agency to hit criminals were it hurts – their pockets. We are also ensuring the UK’s law enforcement and security agencies have the powers they need to do their job effectively.’ The move is part of a range of anti-crime measures spearheaded by home secretary Jack Straw.

Some Big Five firms declined to comment. But Debbie Ward, assistant director of Ernst & Young’s fraud investigation group said: ‘Accountants have always had to report suspicious activities. I don’t see how it can be extended.

What is changing now is the NCIS is actively pursuing more reports.

‘The new legislation will not affect the majority of accountants’ business which is fully legal and honest,’ said the Home Office spokesman.