Solicitors step into appeal on legal privilege

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A drive by accountants to win legal privilege over confidential documents has provoked the Law Society to intervene in a high-profile court case.

The organisation, which represents solicitors, has won permission to take part in an appeal brought by Prudential, the financial services company, against demands that it hand over advice on a tax planning scheme to the Revenue.

The Prudential case highlights long-standing tension between the professions over legal professional privilege – the confidentiality of communications between a lawyer and a client – which some accountants consider an unfair advantage to the legal profession.

John Whiting, tax policy director of the Chartered Institute of Taxation, whose members include lawyers as well as accountants and other advisers, said it was also considering intervening in the High Court case.

He said: “There should be a level playing field. It is the advice that should be privileged, not the actor who gives it.”

Robert Heslett, president of the Law Society, said questions about the nature and extent of legal professional privilege were fundamental to the work of solicitors and any extension should be a matter for parliament. “The boundaries of legal professional privilege must remain clear. Extending it risks creating uncertainty over what can and cannot fall under legal professional privilege,” he said.

Last October the High Court ruled that Prudential was required to disclose advice relating to a commercially marketed tax avoidance scheme, which the Revenue wanted to investigate in 2007. The Revenue then deduced from e-mails that it had not been given all the information.

Lawyers for the Prudential argued in court that legal professional privilege should apply to legal advice about tax law even if was given by an accountant, citing “the modern context where skilled professional advice on tax law is obtained from accountants”.

The judge acknowledged that accountants had the expertise to advise on tax law and represent clients in disputes with the Revenue, but said their success suggested that clients had not been put off by the accountants’ inability to refuse to disclose their legal advice. He suggested that the need for absolute confidentiality in respect of legal advice “may need revisiting”.

Advisers said the Revenue found accountants’ advice useful because it highlighted potential weaknesses in proposed schemes.

Mr Heslett said there was a justification for confining legal professional privilege to advice given by lawyers. He said: “The first duty of a solicitor is to the court and the second is to the client. The duty to the court seeks to ensure that the privilege is not abused.”

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