Accountants' Advice Not Privileged, Says Supreme Court

The Supreme Court has ruled, by a majority of five to two, that advice provided by members of the Institute of Chartered Accountants in England and Wales (ICAEW) is not protected by legal advice privilege (LAP).

The existence of privilege in respect of communications between an adviser and its client means that the disclosure of such communications cannot be required in court proceedings. At present, only communications between solicitors and barristers and their clients are subject to LAP. Advice provided by accountants or other professionals, even where it constitutes ‘legal advice’, is not privileged.

The case concerned tax advice given to life insurance and financial services company Prudential by accountants PricewaterhouseCoopers (PwC). HM Revenue and Customs (HMRC) sought disclosure of various documents passing between them in connection with enquiries into the Prudential’s tax affairs. Prudential had supplied most of the documents requested but claimed that some documents demanded by HMRC were prvilieged.

Prudential and PwC were supported in their case by the ICAEW, which has long been of the view that professional privilege should be extended to its members.

Lord Neuberger acknowledged that ‘there is no doubt that the argument for allowing this appeal is a strong one, at least in terms of principle’, but observed that ‘the extension of LAP to professions other than lawyers may only be appropriate on a conditional or limited basis’ and that such an extension had been considered by two committees, and discussed by a Parliamentary committee, without Parliament deciding to legislate.

The Court therefore ruled that whether LAP should be extended to include accountants providing tax advice was an issue for Parliament to decide.