R (on the application of Prudential plc and another) v Special Commissioner of Income Tax and another [2013] UKSC 1

The Supreme Court has decisively ruled, by a majority of 5:2, that legal advice privilege (LAP) only applies to members of the legal profession. In particular, it will not apply to accountants giving legal advice on taxation matters.


The appeal to the Supreme Court was made by Prudential Plc and Prudential (Gibraltar) Ltd (together, "Prudential"). Prudential had been requested by the HMRC under s20(1) of the Taxes Management Act 1970 (in force at the time) to produce certain documents that related to a tax avoidance scheme. Prudential argued that it should not be compelled to produce documents that had been created by external specialist tax advisers on the basis that those documents contained legal advice and would thus be covered by LAP.

The crux of the case was therefore whether LAP could be extended to legal advice given by accountants (as professionals that are not lawyers).

Legal Advice Privilege

Legal Advice Privilege is a type of privilege that is generally understood to cover communications passing between lawyer and client. It is a common law right that has been developed by judges going back at least to the 16th century and has long been recognised as a fundamental human right, allowing clients to be able to have full and frank discussions with their lawyer and obtain advice about the law, without the fear of those communications being made public.

However, changing commercial practices have meant that legal advice is now often given by professionals other than lawyers. Furthermore, the legal landscape has changed and law firms now often provide a mix of services to their clients, and not always solely through qualified lawyers. Indeed, one of the main reasons behind the Legal Services Act 2007 was to encourage lawyers to team up with non-lawyers to offer multi-disciplinary services to their clients.

The Decision

In this case, the legal advice had been given by an accountant who was employed by a specialist accountancy firm. The judges were in no doubt that the advice provided was legal advice – and that if the advice had been given by a tax lawyer, rather than an accountant, it would have been privileged.

The Supreme Court accepted that there were extremely strong arguments for extending the privilege to include non-lawyers giving legal advice. However, ultimately the conclusion was that the question was a policy issue "best left to Parliament". Lord Neuberger spoke of a general concern about the uncertainties and unknown consequences of extending the right, many of which included wide questions of public policy. In particular, the Court held that the extension of LAP to professionals other than lawyers was one that might only be appropriate on a conditional or limited basis (for example, only for external tax advisers, not those in-house), and that this was a consideration for Parliament.

It was also noted that Parliament had intervened in the past, for example, in the case of statutory extensions of LAP for trade mark and patent attorneys, but had not done so for accountants.


There are two main issues that arise from this Judgment. The first is whether LAP should be extended to include non-lawyers giving legal advice; the second is whether it is appropriate for the Court to delegate the operation of common law to Parliament.

Undoubtedly, an extension of LAP would need to be carefully defined in order to ensure that the right fulfilled its intended purpose. There is also the argument (made by the Respondents) that LAP should not extend beyond lawyers, due to the 'special position' that lawyers hold, for example, as a result of their duty to the Court. Whilst Lord Neuberger accepted this argument was weak, he did consider it carried some weight.

In relation to the development of the common law, on the face of it, the Judgment is peculiar in that the Court appears to be passing the responsibility for fencing a common law right to Parliament. The very essence of common law is that it is set by precedent through the courts. It does not seem appropriate for Parliament to legislate the limitations of a common law right, which, by definition, only exists due to its development through the court. As stated by Lord Sumption (dissenting): "Fundamental rights should not be left to depend on capricious distinctions unrelated to the legal policy which makes them fundamental".


It remains to be seen whether Prudential will appeal the decision to the European Court of Human Rights on the basis that it is in breach of Prudential's Article 8 rights under the European Convention of Human Rights. However, in the meantime, clients should be aware that the current rules on legal advice privilege remain. Therefore, if clients wish to ensure that any legal advice they receive on their tax structures remains privileged, they should consult a lawyer, rather than a firm of accountants for that advice. This could be particularly relevant in relation to those companies who find their tax affairs under public scrutiny.