In a decision handed down on 13 October 2010 the Court of Appeal confirmed that legal professional privilege ("LPP") did not extend to advice on tax law given by accountants or anyone else other than legal advisors (ie qualified solicitors, barristers or foreign lawyers). Please click here for our e-bulletin on the Court of Appeal decision. On 13 April 2011 the Supreme Court granted Prudential permission to appeal, giving the appellant until 4 May 2011 to give notice to indicate whether it wishes to proceed with the appeal.

The issue whether the common law right to object to the disclosure of legal advice on the grounds of LPP should extend to tax advice given by accountants, raises important public policy issues which resulted in the Law Society (represented by Herbert Smith), the Bar Council and the Institute of Chartered Accountants in England and Wales (ICAEW) intervening on either side of the dispute.

The Court of Appeal held that it was bound by judicial precedent (Wilden Pump Engineering Co v Fusfeld [1985] FSR 159) to find that LPP was restricted to advice sought from or given by members of the legal profession – it was not available to clients of other professionals who give legal advice. The Court held that if LPP was to be extended to tax law advice sought from or given by accountants, this was a matter for Parliament and not the courts.

The issue whether the common law right to object to the disclosure of legal advice on the grounds of LPP should extend to tax advice given by accountants, raises important public policy issues which resulted in the Law Society (represented by Herbert Smith), the Bar Council and the Institute of Chartered Accountants in England and Wales (ICAEW) intervening on either side of the dispute.

The Court of Appeal held that it was bound by judicial precedent (Wilden Pump Engineering Co v Fusfeld [1985] FSR 159) to find that LPP was restricted to advice sought from or given by members of the legal profession – it was not available to clients of other professionals who give legal advice. The Court held that if LPP was to be extended to tax law advice sought from or given by accountants, this was a matter for Parliament and not the courts.

Prudential appealed on the grounds that:

  • the public policy considerations on which LPP is based (namely that a client should be able to communicate openly with its advisors when obtaining legal advice) advocate for an extension of LPP to legal advice provided by accountants;
  • there is no justification to differentiate between advice provided by qualified lawyers and advice provided by (properly qualified and regulated) accountants; and
  • Article 8 of the European Convention on Human Rights was unjustifiably limited by depriving legal advice provided by accountants of LPP protection.

The ICAEW supported the application and argued in its written submissions that an extension of LPP to accountants' tax law advice would improve access to justice and promote competition in the spirit of the Legal Services Act 2007.

The issue at the heart of the dispute is to strike a balance between the public's interest in open justice where courts and tribunals are able to decide cases with reference to all available evidence based on a "cards on the table" approach and a client's interest in obtaining legal advice from its legal advisors without a fear that such communications will be disclosable.

The Law Society, as intervener, has indicated its support for the Court of Appeal's decision and will seek to apply to the Supreme Court for permission to make oral and written interventions in the appeal.