RegulationAccounting StandardsExpanding LPP for parliament to decide, court told

Expanding LPP for parliament to decide, court told

Broadening the scope of legal professional privilege to take in accountants is a matter for parliament, the Supreme Court hears

THE COURTS are not in the business of recognising professional bodies and awarding or withdrawing legal privileges, the Supreme Court heard in submissions today.

The hearing, in its third and final day, 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.

Intervening on behalf of the Law Society today, Brick Court Chambers’ Sir Sydney Kentridge QC questioned whether the courts should recognise professional bodies, or indeed withdraw recognition.

Instead, he said, it is for parliament to change the law.

He also queried whether accountancy institutes can guarantee and enforce their code of conduct in practice, and whether any changes the rules might affect the privilege, should the profession be awarded it.

“What are the practical implications [of expanding legal professional privilege]? What if their rules [code of practice] change?” he asked. “The balance was struck already – once and for all – 400 years ago for a reason. The legal profession is a special authority in this field, regulated by the courts themselves.”

In response, Blackstone Chambers’ Lord Pannick QC, acting for Prudential and instruction from PwC, said in his submission that his case is “not asking the court to change the law; we are asking it to identify and apply the current law”.

On the suggestion that expanding the privilege would “open the floodgates” to hundreds of thousands of accountants and members of other professions, Lord Pannick said: “The numbers can’t make a difference. We’re either right or wrong. The person giving the advice must be qualified and regulated just as a solicitor would be.”

At present, lawyers are 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 yesterday that members of ICAEW, ICAS, ACCA and the CIoT advising on tax matters should 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 court has been adjourned and will now deliberate before reaching a decision. No date for the judgment has yet been set.

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