Regulations have been issued (SI 2009/1916) relating to the procedures for referring to the Tax Tribunal a dispute regarding whether a document sought by HMRC under an information notice is subject to legal professional privilege.

This all sounds a bit esoteric but I mention it because it may be more helpful than it immediately appears.

Under the new powers assumed by HMRC in Schedule 36 of the Finance Act 2008 which are quaintly described as “powers, deterrents and safeguards”, HMRC may by notice in writing require a person to provide information or to produce a document if it is reasonably required for the purpose of checking the tax position of another person. Such a notice needs to satisfy a number of conditions and to be approved by the First Tier Tribunal.

However, HMRC cannot require information or documents which are subject to legal professional privilege; documents and information held by auditors and tax advisors are similarly protected.

The problem is that there is no satisfactory way of resolving a dispute about whether information requested by HMRC is covered by privilege or not. The recipient of the notice would have to appeal to the Tribunal or seek Judicial Review.

These regulations are intended to solve this problem by providing a specific procedure for the Tribunal to consider and direct whether and to what extent a document is privileged and which part (if any) should be disclosed.