It will have been difficult to miss the Supreme Court decision in Prudential Plc v Special Commissioners of Income Tax [2013] UK SC1. The issue was whether the advice of accountants should be protected by privilege in the manner traditionally afforded to lawyers.

I cannot begin to do justice to the eloquent analysis of their Lordships. I will simply say it was powerfully argued that as most tax advice is given by accountants and as privilege would apply to exactly the same advice if it had been given by a lawyer, it should apply to accountants as well. However the Supreme Court did not feel the boundaries of legal advice privilege should be extended. Any such extension was a matter for Parliament and it is significant that they have refused to do so on a number of occasions.

This does place accountants in a difficult (and unsatisfactory) position as their advice is not protected by privilege and can be demanded by HMRC to assist them in their arguments – whereas advice given by lawyers cannot be called for by HMRC. The Supreme Court acknowledged that this was illogical and outmoded in the modern world.

This decision does not affect litigation privilege which applies to documents created for the purpose of litigation, and these may afford accountants some protection.