The Court of Appeal heard the Prudential case on 14 and 15 July 2010
The key question in the case is whether tax advice given to Prudential by non-lawyers, in this case the firm of chartered accountants PricewaterhouseCoopers, is covered by legal professional privilege (LPP).
Judgment in the High Court on 14 October 2009 ruled that LPP only applies to legal advice given by lawyers. However, in his judgment in the High Court Charles J said:
"In my view 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. … So, in my view, Prudential have shown that accountants do what lawyers are described as doing in the cases that establish LPP."
The ICAEW was given leave to intervene in the Court of Appeal Hearing. The ICAEW intervention was not concerned with the facts of the particular case but rather the public policy arguments as to why chartered accountants giving tax advice should be entitled to LPP.
A summary of the arguments put forward by Charles Flint QC on behalf of the ICAEW intervention were:
- Chartered accountants giving tax advice in confidence to clients are giving advice on the law.
- There is no functional distinction between a lawyer giving advice on tax law and a chartered accountant giving such advice.
- Chartered accountants giving tax advice in confidence to clients are subject to professional controls and ethical duties equivalent to those to which lawyers are subject.
- There is no principled distinction between the function and status of a chartered accountant giving tax advice in confidence and a lawyer giving such advice.
- The policy considerations which underlie the common law privilege in respect of legal advice apply equally to tax advice given by a chartered accountant.
- The principle underlying legal advice privilege should apply with equal force to the giving of tax advice by a member of the chartered accountancy profession. There is no principled distinction to be drawn in that respect between lawyers and chartered accountants.
A witness statement was also presented to the Court by Frank Haskew, Head of the ICAEW Tax Faculty. This set out the manner in which chartered accountants are trained in tax law matters and how that training is kept relevant by Continuing Professional Development and how the profession is regulated to ensure that firms and individuals are competent to give tax law advice.
The Court of Appeal is not likely to give its judgment in this case before October.