HMRC Can See Accountants' Tax Advice to Clients

12 January 2010

HM Revenue and Customs (HMRC) recently won a significant victory in a tax case when the court ruled that tax advice given by an accounting firm to its client is not privileged. In other words, HMRC can force accountants to divulge advice given to their clients on tax law matters.

The case involved insurance giant Prudential, but the ruling will be applicable to taxpayers large and small who engage accounting firms for tax advice.

The Special Commissioners ruled that where correspondence with accountants would add to the relevant facts determining tax liability, the issue of a notice requiring disclosure of tax planning advice was valid, and that legal professional privilege did not apply.

Correspondence between solicitors and their clients in which legal advice is given is subject to privilege and will not be disclosed to HMRC.

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