The Law Society has been granted permission to intervene in a Court of Appeal case that could see legal professional privilege (LPP) extended to non-lawyers.

In his High Court judgment in Prudential v Special Commissioner of Income Tax and Philip Pandolfo (HM Inspector of Taxes) in October, Justice Charles declined to extend such privilege to non-solicitors, but said that accountants and lawyers should operate on a ‘level playing field’ when it comes to disclosing legal advice on tax law issues.

Financial services company Prudential argues that it should not have had to pass tax planning documents to HM Revenue & Customs because legal professional privilege applied to those documents.

Society President Robert Heslett said today that the boundaries of LPP ‘must remain clear’, and that any extension of LPP should be a matter for parliament.

‘The concept of legal professional privilege has been and remains closely tied to the administration of justice,’ he said. ‘The first duty of a solicitor is to the court and the second is to the client. In this respect, a solicitor is unique among the professions. The duty to the court seeks to ensure that the privilege is not abused.

‘In consequence, the courts have taken the approach that legal advice privilege does not attach solely because of the purpose and nature of the advice but also because the advice emanates from a member of the legal profession. [This] case has the potential consequence of giving anyone who describes his or her self as a tax accountant or other professional the ability to withhold vital information from bodies such as HMRC.’

Charles said in his judgment in October: ‘Prudential have put forward a compelling, and indeed unanswerable, case that in modern conditions accountants have the expertise to advise on tax law and it is firms of accountants, rather than firms of solicitors, who do give such advice and represent clients in disputes with the Revenue on many aspects of their tax affairs.’ He suggested that privilege could be restricted for lawyers where the work of both professions overlapped.

Julian Copeman and Heather Gething, partners at City firm Herbert Smith, have been instructed by the Society to handle the intervention.

In certain instances where a client seeks legal advice from a solicitor, communications between the two parties are protected by LPP, and cannot therefore be made available to the court or third parties. Currently, LPP is limited to communications between solicitors and their clients.

Prudential concerns the advice provided by accountants where litigation was not contemplated. In such scenarios the advice and any information in relation to it will not benefit from legal advice privilege and a taxpayer may have to disclose documents or information, including its communications with the accountant under schedule 36 of the Finance Act 2008 and section 20 of the Taxes Management Act 1970.