The recent decision in the case of R (on the application of Prudential Plc and another) v Special Commissioner of Income Tax and another shows that the issue of legal professional privilege ("LPP") in relation to documents regarding advice given to a client on tax matters underlines the unsatisfactory and anomalous current state of the law.
As matters stand, documents are protected from disclosure to HMRC where they are created in relation to tax advice given by a solicitor or barrister but not where the advice is given by a tax adviser or accountant. It is surely absurd that a client can ensure that he obtains the benefit of LPP where he instructs his solicitor to obtain advice from a non-solicitor tax adviser on his behalf but not if he goes to the tax adviser directly. Big Brother HMRC is exploiting this particular loophole rather regularly now - even though we all know how much they are against exploiting loopholes when the boot is on the other foot.
Neither am I terribly impressed that the accountancy bodies seem to be looking to have LPP extended just to them so that they can compete with the lawyers. Surely it is the nature of the advice, not the status of the adviser, which should determine whether documents are protected? A client's right to privacy and confidentiality of communication should be an inalienable right, not one which depends on an irrelevancy such as the professional status of the adviser with whom he is communicating.
