Accountants giving legal advice are not covered by professional privilege


Today in R v Special Commissioner of Income Tax and others the Court of Appeal has upheld the judgment of Charles J in the High Court, confirming that legal advice privilege does not extend to cover advice about law (e.g. tax law) given by accountants.


The Appellants (Prudential) were served with notices under section 20 of the Taxes Management Act 1970 in exercise of HMRC’s investigatory powers. The notices required Prudential to disclose documents in relation to their tax liability. Prudential argued they were not obliged to disclose the documents as they related to advice about tax law, albeit from accountants, and were covered by legal professional privilege (LPP).


The appeal by Prudential was dismissed. The Court was bound by the decision in Wilden Pump Engineering Co v Fusfeld [1985] FSR 159 to hold that LPP does not apply, at common law, to any professional other than a qualified lawyer.

Even if the Court was not so bound, the same decision would have been reached for the following reasons:

•If LPP were extended to apply to members of other professions who give advice on law, the scope and application of this rule would be uncertain and therefore may be in breach of human rights law; and
•If the law is to be extended, it must be done by Parliament. Parliament did provide limited protection to accountants under the Taxes Management Act 1970 and would have extended this protection further if that had been their intention.


The Court of Appeal judgment only disagreed with Charles J’s High Court judgment on two points:

•That there is an argument the application of LPP to lawyers should be restricted; and
•That the court might be able to prescribe conditions under which accountants would be covered by LPP.

Prudential’s argument that only allowing LPP to apply to members of the legal profession breaches articles and 8 and 14 of the European Convention on Human Rights was rejected by the Court of Appeal. Instead, they held that extending the rule would make the application and scope of LPP so uncertain that there would be a breach of the human rights test that the rule should be "in accordance with the law".

The case generated a lot of interest within the legal and accountancy communities. The Institute of Chartered Accountants in England and Wales, the General Council of the Bar and the Law Society all intervened. However, the Court of Appeal’s decision is no surprise; and was likely seen as a necessary step for Prudential to try to take the case to the Supreme Court. Until then, advice in relation to tax and other matters sought from and given by accountants will not benefit from legal advice privilege. As such, clients may have to disclose documents in this regard.

This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, please go to www.law-now.com