Revenue

Notice to produce documents material covered by legal professional privilege no power in income tax commissioner granting consent to issue of notice to allow oral representations by the recipient R (Morgan Grenfell & Co Ltd) v Inland Revenue Commissioners: CA (Lords Justices Schiemann, Sedley and Mr Justice Blackburne: 2 March 2001The applicants devised a scheme for a client, involving the granting of leasehold interests in the clients property to them for a lump sum, to be leased back to the client for a periodic rent.The scheme was intended to be tax-efficient for both the applicants and the client.

The inspector, suspecting that the transactions might be capital rather than trading transactions, issued a notice under the Taxes Management Act 1970, section 20(1) to the applicants requiring them to produce certain documents.The Divisional Court dismissed an application for judicial review of a special commissioners consent to the issue of the notice.The applicants contended that some of the documents in question were covered by legal professional privilege and that the commissioner should have granted their request to make oral representations at the consent hearing.Michael Beloff QC, Giles Goodfellow and Sarah Dunn (instructed by Slaughter and May) for the applicants; Timothy Brennan and Ingrid Simler (instructed by the solicitor of Inland Revenue) for the Crown.Held, that the provisions of section 20 taken as a whole precluded a claim for legal professional privilege except where it was expressly preserved; and that a special commissioner had no power to allow a taxpayer to make oral representations at the hearing of an application for consent to the issue of a notice under section 20(1).