Legal advice privilege entitles a party to withhold evidence from production to a third party or the court where the evidence involves advice between a lawyer and client.
In the case of R (Prudential plc and another) v Special Commissioner of Income Tax and another, PricewaterhouseCoopers (“PwC”) devised a tax avoidance scheme that was adapted for use by the Prudential group. HMRC sought to investigate the transactions and sought disclosure of the documents relating to the scheme. Prudential complied with most of these requests but refused to produce documents that related to the seeking (by Prudential) and the giving (by PwC) of legal advice in connection with the transactions. Prudential sought to rely on the principle of legal advice privilege.
In a very important decision, the Supreme Court held that legal advice privilege only protects members of the legal profession. The court found that, while the restriction of legal advice privilege to members of the legal profession could fairly be said to be illogical, it was not for the courts to change a law endorsed by Parliament. This decision represented a defeat in the accountancy profession’s long battle to try and get legal advice on tax matters provided by chartered accountants protected by legal advice privilege. It means that, regardless of the content of the advice, only advice provided by lawyers will be protected by legal advice privilege.
The Law Society has welcomed this decision with Desmond Hudson, the society’s chief executive stating “the relationship between a solicitor or barrister and his or her client is a precious human right, tested and refined by centuries of common law.” However, the Institute of Chartered Accountants in England and Wales have urged Parliament to find a way to resolve how multi-disciplinary practices address professional privilege.