HMRC can see your accountants' advice

HM Revenue & Customs has won a significant victory after a court ruled that tax advice given by an accountancy firm to its clients is not privileged.

Accoutants warn that, as a result of the ruling, HMRC can now force them to divulge specific advice they make available to their clients on tax law matters.

Although the case involved insurance giant Prudential, the judgement is applicable to all taxpayers, irrespective of their size, who engage accountants for tailored advice.

According to the Special Commissioners, where correspondence with accountants would add to the facts needed to determine a tax liability, it should not be confidential.

In these circumstances, the issue of a notice from HMRC requiring the accountant to share tax planning advice is valid, and legal professional privilege does not apply, the court said

Correspondence between solicitors and their clients which contains legal advice is privileged, said law firm Harold Benjamin, and will not be shared with HMRC.

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