The Court of Appeal has rejected the Prudential’s argument that legal professional privilege extends beyond lawyers, to other professional tax advisers.
In a ruling given on Wednesday morning, following arguments heard over two days in July, Lord Justice Lloyd said that there had been a number of cases in which reforming LPP had been considered over the last 40 years and concluded that "Parliament's failure to change the law in this respect is not an accident".
The Prudential’s case is about whether particular information about a tax scheme has to be disclosed to HMRC. The case has far-reaching implications for the boundaries of LPP and whether it extends to advice on tax law given by suitably qualified non-lawyers.
The CIOT has long taken an interest in LPP, raising it regularly with Treasury ministers and HMRC. We have followed the Prudential case carefully, and decided it made sense for the Institute to seek to intervene in the Court of Appeal hearing – in the interests of our members, and of the wider tax-paying public.
The CIOT considered making a separate intervention, but decided that our arguments could be effectively (and cost-effectively) put and the interests of our members represented by providing support for the ICAEW’s existing intervention and contributing to the arguments put by their barrister, Charles Flint QC. It was made clear to the Court that the arguments in relation to the extension of LPP to chartered accountants could be applied also to chartered tax advisers (CTAs).
The Institute’s position on LPP is based on the principle of the level playing-field: there should be a common standard of privilege across all properly-qualified professionals able to advise on tax matters. To have a situation where expert tax advisers (and therefore their clients), operating to the highest professional standards, are accorded a lower level of privilege than advisers whose expertise in tax matters may be lesser, simply because one has a legal qualification and the other does not, is in the interests neither of the public nor of the tax authorities. Taxpayers should be able to go to the adviser best qualified to give the advice sought, without being influenced by the availability or otherwise of LPP.
Where do we go from here? Prudential may try to appeal to the Supreme Court, but it is looking increasingly likely that any change in this area will only come from parliamentary action.
CIOT External Relations Manager
15 October 2010
To read more on this issue:
Prudential loses legal privilege appeal, Accounting Web, 13 October 2010
ICAEW: Legal privilege rules "unsustainable", Accountancy Age, 13 October 2010
A Fundamental Human Right, article by Peter Fanning, Chief Executive of the CIOT, Tax Adviser, September 2010