In our e-update of 20 October 2010, we reported on the decision of the Court of Appeal in the case of Prudential plc and Another v Special Commissioner of Income Tax in which the court decided that legal professional privilege ("LPP") only attached to advice given by lawyers, not to tax law advice given by accountants.
On 13 April 2011, the Supreme Court granted Prudential's application for permission to appeal and, earlier this week, Prudential gave notice of their intention to appeal to the Supreme Court against the decision of the Court of Appeal.
Unsurprisingly, there is divided opinion amongst lawyers and accountants as to whether LPP should be extended to accountants. It has been a controversial matter for many years.
As long ago as 1967, the Law Reform Committee made recommendations on the subject; in 1983, the Committee on Enforcement Powers of the Revenue Departments recommended that LPP should be extended to duly appointed tax agents who have been admitted members of an incorporated society of accountants or of the Institute of Taxation, and should apply only to advice given by the agent (this recommendation by the Committee was not implemented); and in 2001, The Director-General of Fair Trading, in a report on Competition in Professions, expressed the view that the rule by which LPP applies only where the advice is sought from and given by a lawyer restricted and distorted competition. A government consultation on the issue followed, resulting in the decision (in July 2003) not to propose any change to the law.
The importance of the issue as to whether LPP applies where legal advice is sought from and given by accountants led to the Court of Appeal granting permission to intervene in the appeal to the Institute of Chartered Accountants in England and Wales, the Bar Council and the Law Society. It is reasonable to assume that they will all be keen to be heard when the matter reaches the Supreme Court.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
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