ICAEW makes case for legal professional privilege for accountants

REGULATED QUALIFIED ACCOUNTANTS and tax advisors should be able to offer clients the benefit of legal professional privilege (LPP) on tax law, according to submissions made to the Supreme Court on behalf of insurance provider Prudential against HM Revenue & Customs.

The hearing, brought before the Supreme Court, is the result of a tax dispute between Prudential and HMRC. In 2010, the Court of Appeal rejected claims by Prudential that when advising on tax law, accountants should be protected by legal professional privilege.

Lawyers are currently the only professionals covered by the privilege, which allows a client to refuse to disclose certain confidential, legal communications to third parties, including courts.

A panel of seven judges in the Supreme Court heard members of ICAEW, ICAS, ACCA and the CIoT advising on tax matters should also be covered by legal advice privilege – a subset of legal professional privilege that specifically protects confidential communications between lawyers and their clients, but excludes confidential communications with third parties.

The privilege should be updated “as society changes”, said Blackstone Chambers’ Lord Pannick QC acting for Prudential and instructed by PwC. 

“This [extending the privilege] would be recognition of that change.”

Additional testimony was provided by Fountain Court’s Patricia Robertson QC, intervening on behalf of the ICAEW. A particular issue arising from the absence of privilege, she said, was that citizens cannot be sure that their “candour” and advice received from their accountant will not go further.

Robertson put forward a test in order to determine whether an accountant might be covered by the privilege. If covered by LPP, qualified advisors with the ICAEW, ICAS, ACCA and the CIoT that are subject to the institutes’ code of practice would be covered when advising on a core area, such as tax.

James Eadie QC, also from Blackstone, responded for HMRC, noting that as long as the privilege has existed, courts have defined it as “one between a lawyer and a client” and that the privilege was not solely about confidentiality, and must only be provided in a “relevant legal context”.

He added there is a “strong public interest” in all relevant information in cases to be available to the courts.

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