Following our recent e-update on the ECJ decision in Akzo relating to Legal Professional Privilege ("LPP") and in-house lawyer communications, the Court of Appeal in England ("CoA") has now ruled that LPP does not extend to communications of accountants giving legal tax advice.

In summary, LPP is an important legal principle contributing to the fundamental right of a client to communicate in confidence with their lawyer. As a general rule, communications between lawyers and clients attract LPP and so cannot be required to be disclosed.

In the case in question, HMRC requisitioned documents (using statutory powers conferred upon them) from insurance company Prudential as part of a tax enquiry. However, the documents requisitioned contained legal tax advice issued by accountants to Prudential and so the company refused to release the documents arguing that they were subject to LPP.

In court, Prudential argued that it was open to the CoA to extend LPP to legal tax advice given by accountants. Their argument centred on the fact that the nature of the advice was legal, even if it wasn’t a lawyer who provided the advice.

Although the CoA did not see Prudential's request as "unreasonable" it was nonetheless refused. The CoA ruled that the extension of LPP to other professionals, including accountants, was a matter for Parliament and not for the courts, and in fact Parliament had previously rejected the idea of such an extension on several occasions in the past. Accordingly, the court noted that "failure to change the law in this respect is not an accident".

The Law Society of England and Wales has welcomed this decision, believing that adherence to the current principles of LPP provides maximum certainty and reassurance for clients and solicitors. The decision will, however, come as a blow to companies and accountants who seek to keep such communications from being disclosed.

The case of Prudential PLC and Prudential (Gibraltar) Ltd v Special Commissioner of Income Tax and Philip Pandolfo (HM Inspector of Taxes) can be accessed at