In the matter of Prudential PLC and Prudential (Gibraltar) Limited v Special Commissioner of Income Tax and Philip Pandolfo (HM Inspector of Taxes), the UK Court of Appeal has unanimously confirmed that legal professional privilege (LPP) does not apply to any other professional except qualified lawyers – solicitors, barristers and “appropriately qualified” foreign lawyers.
Prudential had sought to extend the existing rule of LPP – which gives certain communications between a lawyer and their client absolute confidentiality so that it cannot be disclosed to the court or third parties without the client’s consent – to advice on tax law given by accountants. The Court of Appeal emphasised that extending LPP communications to other professionals, such as accountants, was a matter for Parliament not for the courts. The Court noted that Parliament had considered the matter several times over the past 40 years and “that failure to change the law in this respect is not an accident.”
Prudential had argued that taxpayers often approach accountants rather than lawyers for advice on tax liabilities, which involves a consideration of, and advice about, the relevant law. They had argued that a client’s communications should be protected from disclosure if the advice is given by an accountant in the same way as it would be if given by a solicitor. The Court rejected that proposition.
The Court did note in its judgement that tax legislation makes express provision in relation to tax accountants and to tax advisers with a carefully formulated equivalent of privilege which is limited in its scope. A copy of the judgement is available here.