TaxCorporate TaxLeader: Be careful what you wish for over legal privilege

Leader: Be careful what you wish for over legal privilege

Accountants may yet succeed in wrestling away lawyers' monopoly on legal professional privilege. By doing so they risk a scenario that is no good for either party

Leader: Be careful what you wish for over legal privilege

ACCOUNTANTS MAY YET SUCCEED in wrestling away lawyers’ monopoly on legal professional privilege. By doing so they risk a scenario that is no good for either party.

The door remains open for the profession to extend the scope of privilege, which sees communications between lawyers and their clients kept confidential, to the tax advice they give to clients through behind-the-scenes lobbying.

Earlier this year, the Supreme Court ruled that to extend legal advice privilege beyond the legal profession would be to take privilege beyond its long-understood limits. Lord Sumption’s view that legal advice attracted privilege if given by a profession that ordinarily gives skilled legal advice failed in part because of its breadth.

According to an argument put forward at a Pinsent Masons panel debate on the subject, such scope – which could encompass a town planner’s advice on planning permission, or an auditor’s treatment of a receipt of debt – would create litigation uncertainty and lead to decades of litigation as people mapped out the boundaries.

Yet if the profession were to revisit this debate with narrower parameters – legal privilege for chartered profession only, or relating to advice of specified matters – its arguments could gain more traction in parliament.

By leaning on parliament to take a look at legal advice privilege, which some argue gives the legal profession an unfair competitive advantage in providing tax advice, the profession could end up in a no-win situation. It would be much easier for the government to simply remove legal privilege from tax advice altogether than find a way to extend it.

In today’s climate of political rhetoric around tax avoidance it is not such a fanciful idea. Indeed, legal privilege would actually protect discussion between adviser and client in which aggressive or unsavoury tax schemes were being cooked up.

No doubt the profession will continue lobbying for change, but in the words of one lawyer it “should be careful what it wishes for”.

Richard Crump is deputy editor of Accountancy Age & Financial Director

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