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Legal professional privilege – prudential case confirmed

03 February 2013   (0 Comments)
Posted by: SAIT Technical
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By Andrew Lewis (DLA Cliffe Dekker Hofmeyr Tax Alert)

Executive summary

In R (Prudential plc and another) v Special Commissioner of Income Tax and Another [2013] UKSC 1, the Supreme Court of the United Kingdom gave judgment on the issue of whetherlegal professional privilege (LPP) should be extended to non-lawyers.The Supreme Court confirmed that LPP should not extend to communications in connection with advice given by professional people other than lawyers.

Full article

The issue of whether legal professional privilege (LPP) may be extended to apply in respect of communications between accountants (or other advisors) and their clients in the course of providing tax advice, and the different opinions in this regard, has been discussed in a number of our previous Tax Alerts.

In the case of R (Prudential plc and another) v Special Commissioner of Income Tax and Another [2013] UKSC 1, the Supreme Court of the United Kingdom gave judgment on the issue of whether LPP should be extended to non-lawyers. The case was on appeal from the Appeal Court where the extension of LPP had been denied.

In short, the taxpayer received a statutory notice from the revenue authorities, forcing it to produce documents in connection with its tax affairs. The matter concerned legal advice given by accountants in respect of a tax avoidance scheme. The taxpayer argued that it was entitled to refuse to comply with the notice on the grounds that the documents were covered by LPP.

The Supreme Court confirmed that LPP should not extend to communications in connection with advice given by professional people other than lawyers. In particular, the court observed that:

As long as LPP is limited to advice from members of the legal profession, the strong, and justified, presumption will be that LPP does not apply in connection with any communications in that context, because lawyers normally only give legal advice. In other words, extending LPP to non-lawyers would likely lead to what is currently a clear and well understood principle becoming an unclear principle, involving uncertainty.

If there are reasons of public policy to extend LPP to non-lawyers, the matter should be left to Parliament as the courts are not best placed to assess how profound such a change would be, whether there are good reasons of policy for making it, and what protections (if any) are needed to ensure that the ambit of the privilege is kept within limits.

In a South African context, there was an opportunity to extend LPP to non-lawyers with the enactment of the Tax Administration Act, No 28 of 2011, which came into operation with effect from 1 October 2012. However, despite submissions by certain tax practitioners when the legislation was before parliament, SARS has indicated that the matter would be revised in the coming months. For the time being, LPP may only be relied on where lawyers are involved and does not extend to communications between accountants (or other professionals) and their clients in the course of providing tax advice


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