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Legal and tax advice from non-lawyers must be disclosed

15 February 2012 |

The Supreme Court is to hear the appeal in the ‘Prudential’ case against the decision that legal advice privilege does not extend to non-lawyers.

Background

The purpose of legal advice privilege is to protect confidential communications between a client and his lawyer from production where otherwise that would be required – for example in litigation or to tax authorities. In this case, Prudential had obtained tax advice from accountants. HMRC served a notice requiring Prudential to deliver certain documents which were relevant to Prudential’s tax position but this would not include privileged documents. Prudential argued that privilege applies not only to members of the legal profession but also to legal advice on tax received from accountants. This was rejected by the courts and has now been appealed to the Supreme Court by Prudential where it will be heard in November 2012.

Why is this case important?

This case is important as the law on legal advice privilege currently protects only legal advice given by members of the legal profession but not accountants even though the advice is legal in nature. If the Supreme Court agrees with the Court of Appeal then it will be important for clients wishing to protect advice they seek on tax issues to obtain that from lawyers and not their accountants who could be forced to disclose the advice they have given.

Resources

British and Irish Legal Information Institute – EWCA [2010] Civ 1094 pay

For further information or to discuss the issues raised, please contact Guy Abbiss, David Widdowson or Stephen Wright on +44 (0) 20 3051 5711.

Disclaimer

Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.

Circular 230 disclosure

To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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