Supreme Court Confirms Legal Advice Privilege Extends Only To Legal Profession

R (on the application of Prudential Plc) v. Special Commission of Income Tax [2013] UKSC 1

The Supreme Court has recently delivered an important decision on the question of whether legal advice privilege covers communications between a client and a non-lawyer. By a 5:2 majority, their Lordships held that the privilege extends only to advice given by members of the legal profession. Consequently, documents relating to a tax law advice given in this case by chartered accountants had to be disclosed to the UK tax authorities.

Privilege

Where it applies, privilege protects a party from having to disclose its communications. There are two types of privilege: legal advice privilege and litigation privilege. The Prudential judgment is concerned with legal advice privilege alone.

Legal advice privilege protects all communications passing between a client and its lawyers in connection with the provision of legal advice except in very limited circumstances.

Did tax law advice from chartered accountants attract legal advice privilege?

The Applicant, Prudential Plc, had received advice from an international firm of chartered accountants, PriceWaterhouseCooper (PwC), in relation to a tax avoidance scheme. The UK tax authorities had issued an order requiring Prudential to disclose certain documents received from PwC in relation to that advice. Prudential sought to overturn the order on the basis that the advice was covered by legal advice privilege. The application failed in the High Court and in the Court of Appeal and the matter proceeded on appeal to the Supreme Court for a final decision.

Even though the tax advice had not been given by a member of the legal profession, Prudential argued that legal advice privilege should extend to advice given by a non-lawyer (such as an accountant) if the same advice would be given to the same client by a member of the legal profession. It was common ground that the majority of tax advice in modern times is given by qualified accountants rather than by lawyers.

The Supreme Court's decision

The starting point taken by the majority of the Supreme Court was that it was universally believed that legal advice privilege applies only in respect of advice given by the legal profession (which, in England and Wales, Lord Neuberger clarified meant barristers, solicitors, members of the Chartered Institute of Legal Executives and, by extension, foreign lawyers).

Numerous previous judicial decisions had refused to extend the...