Kevin Reed, Accountancy Age, Wednesday 13 October 2010 at 11:09:00

ICAEW licks its wounds after courts decide against extending legalprofessional privilege to tax advisers

A court ruling that maintains legal professional privilege solely for lawyersis "contrary to the public interest", according to theICAEW.

The institute said it was disappointed with this morning's Court of Appeal'sdecision, and would review its options.

"As it stands at the moment, the current position is anti-competitive for UKtaxpayers and businesses. Whether they consult lawyers or chartered accountants,in our view clients who seek professional tax advice should be treated in thesame way, irrespective of the qualification of the person," said Frank Haskew,head of the ICAEW tax faculty.

"We believe that the current situation is unsustainable and contrary to thepublic interest. However, the judges decided that they were bound by existingprecedent and that only lawyers were entitled to LPP.

"As a professional body, we will be reviewing the options available to pressthe case for reforming the LPP rules so that there is a level playing field fortaxpayers seeking tax advice."

The LawSociety said the decision was "reassuring for clients andsolicitors".

"The concept of LPP has been and remains closely tied to the administrationof justice. The first duty of a solicitor, like other lawyers, is to the courtand the second is to the client. In this respect lawyers are unique among theprofessions," said Law Society president Linda Lee.

"If LPP is to be extended beyond the advice of the legal professions it mustbe done via statute that clearly defines the limits and conditions of anyextension both as to the areas of law or the professional adviser to ensurecertainty as to the scope of its application."

The Court of Appeal hearing sawPrudentialfight to keep advice it had received from tax advisers protected by LPP. HMRevenue & Customs wanted access to the advice.

The ICAEW made a representation to the court in favour of extending LPP. TheLaw Society presented a counter-argument.

Further reading:

Taxadvisers lose bid to extend legal privilege