R (Prudential) v Special Commissioner of Income Tax

The Court of Appeal has ruled that legal advice from accountants is not covered by legal professional privilege. 

The issue arose in the context of HMRC’s statutory investigation powers. Prudential sought to challenge, by way of judicial review, HMRC’s entitlement to its communications with its accountants on the basis that they were prepared for the purposes of obtaining tax law advice and thus covered by legal professional privilege (LPP). Prudential argued that the rationale behind LPP, namely the right to take skilled advice about the law (a fundamental condition on which the administration of justice as a whole rests) applied just as much to communications between client and accountant as it did to communications between client and lawyer.

The Court held that LPP does not apply, at common law, in relation to any professional other than a qualified lawyer: a solicitor or barrister, or an appropriately qualified foreign lawyer. It was bound by an earlier decision of the Court of Appeal in Wilden Pump Engineering Co v Fusfeld [1985] FSR 159 (which held that LPP did not apply to patent agents) and the Human Rights Act 1998 did not assist Prudential in arguing to the contrary. The Court also concluded that, even if it were not bound by Wilden Pump, it was not open to the Court to hold that LPP applies outside the legal profession except as a result of statutory provision by Parliament.

Lord Pannick QC represented Prudential, Charles Flint QC represented the Institute of Chartered Accountants in England and Wales (intervening) and Diya Sen Gupta was Junior Counsel for HMRC, the successful party.