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The Court of Appeal (CoA) has ruled that legal professional privilege cannot be extended to accountants offering tax advice.

This case came after HMRC issued a Section 20 notice requiring Prudential to deliver documents that HMRC believed contained information relevant to Prudential’s tax liability.

Prudential argued that the documents were privileged information makes clear that legal privilege does not arise in the context of accountants.

In its judgment the CoA stated that the scope of legal privilege was a matter for Parliament to decide and not the courts “Failure to change the law in this respect is not an accident.”

In a ruling given last October the court expressed sympathy with the claimant’s case but ruled against it stating: “”LPP is linked to the legal profession and not to just the purpose and nature of the advice and assistance [service].”

Needless to say the Law Society have said: “The courts have long taken the approach that legal advice privilege does not attach solely because of the purpose and nature of the advice but also because the advice emanates from a member of the legal profession. Today’s judgement reaffirms that notion.”

Given the noises emanating from Parliament about tax avoidance schemes, I can not see them engaging with this issue for the foreseeable parliament (but then again, Governments are prone to the odd U turn).

Is this the case of the legal system propping itself up?

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