UK Supreme Court Declines To Extend Scope Of Legal Advice Privilege

Keywords: UK Supreme Court, legal advice privilege, LAP, Prudential, HMRC

In a judgment delivered on 23 January 2013, the UK Supreme Court1 upheld the decision of the Court of Appeal2, that legal advice privilege ("LAP") should not be extended to cover legal advice provided by accountants.

Facts of the case

This case arose as a result of notices served on Prudential ("the Company") by HM Revenue and Customs ("HMRC") pursuant to section 20 Taxes Management Act 1970, requiring disclosure of information relevant to the Company's tax liability. The documentation sought included communications between the Company and PricewaterhouseCoopers, a firm of accountants, on a tax scheme.

In R (Morgan Grenfell & Co) v Special Commissioner of Income Tax [2002] UKHL 21, the House of Lords held that a notice under section 20 does not require a person to disclose documents to which LAP applies.

The Company challenged the notices on the basis that the material sought was covered by LAP.

The issues and previous judgments

In October 2009, the High Court held that LAP did not extend to legal advice given by accountants in respect of tax matters.

The Company appealed. Given the importance of the issue, the Law Society, the Bar Council and the Institute of Chartered Accountants were all given permission to make representations to the Court of Appeal. One of the Company's principal arguments was that it should be the nature of the advice (legal advice concerning tax) which was determinative, not the status of the adviser.

The Court unanimously dismissed the Company's appeal, holding that it was bound by an earlier Court of Appeal decision that LAP does not apply, at common law, in relation to any professional other than a qualified lawyer: a solicitor, barrister or appropriately foreign qualified lawyer. (Wilden Pump Engineering Co v Fusfeld [1985] FSR 159, Court of Appeal.)

It further held that, while Article 8 of the European Convention for the Protection of Human Rights guarantees protection of advice provided by members of the legal professions, it cannot be taken to require the extension of that privilege to communications with any other person who may be asked to give legal advice. Further, it is a requirement of human rights law that the relevant legal position would be appropriately certain; to extend LAP (without statutory help) to other professionals would render its scope "lamentably uncertain".

The Court went on to say that even if it was not bound by...