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Accountants and Legal Professional Privilege

The UK Court of Appeal recently ruled on a case on whether legal professional privilege could be availed of by accountants providing legal advice on tax matters.

In the case, the UK Revenue, with a view to investigating a commercially marketed tax avoidance scheme, served notice on a taxpayer to produce documents relating to legal advices sought or received on tax matters from foreign lawyers and accountants.  

The taxpayer claimed that under UK tax law they were not obliged to disclose the advice documents on the basis that they were protected by the principle of legal professional privilege. The taxpayer submitted that the determining factor was not the status of the advisor but the nature of the advice and therefore a qualified professional person giving legal advice was covered by legal professional privilege. However, the judge disagreed and concluded that legal professional privilege applied, at common law, only to advice provided by legal professionals. The judge also pointed out that after consideration, the UK parliament had not created any statutory extension of legal professional privilege to legal advice given by accountants on tax matters. The judge therefore dismissed the appeal.

Although the above is a UK case and not binding in Ireland, the outcome will be of interest to tax professionals and their clients. The decision provides a reminder of the differences between the protections afforded to tax advice given by accountants and lawyers.

This article has been authored by Conor Bradbury.