A major principle, on which the legal system in England and Wales relies, is that any communication between a client and his/her Lawyer is private. This principle is known as “legal professional privilege” or LPP.
Is this also available for Accountants?
In a recent case Prudential Plc had sought to withhold from HMRC, documents relating to advice which the Company had been given by an accounting firm with regard to marketing a tax avoidance scheme, on the basis that communications were subject to LPP. The original case went against Prudential and indeed the Supreme Court has now confirmed that LPP only applies to communications with qualified Lawyers, Solicitors or Barristers, even where the advice given is legal advice which another professional person is qualified to give. Whilst the President of the Supreme Court, Lord Neuberger, acknowledged that there was a strong argument in favour of upholding the appeal, it was ultimately a matter for Parliament and not the Courts, to consider whether or not LPP should be extended to communications between clients and professionals.
In other words HMRC can force Accountants to divulge advice given to their clients on tax law matters. If you are discussing sensitive material with your Accountant you should, therefore, take note!