Behague: legal professional privilege

Legal professional privilege has been held by the First Tier Tribunal to cover documents containing publicly available information and generic advice where this would identify the subject-matter of the advice sought.

The taxpayer was appealing against a notice to provide information and documents to HMRC under paragraph 1 of Schedule 36 of the Finance Act 2008 on the grounds that the documents concerned - the engagement letter and a report concerning trust arrangements - were subject to legal professional privilege (LPP).

LPP covers all communications made between a client and his legal adviser for the purpose of giving or obtaining legal advice.

LPP extends to the fact of seeking legal advice on a specific matter

The Tribunal judge did not agree that an engagement letter is part of the continuum of legal advice and therefore always protected by LPP. To the extent that a letter dealing with client care matters merely sets out the terms on which the solicitor will act, there is no reason for it to attract privilege. However, while not privileged by its very nature, to the extent that this engagement letter specified the particular matters on which the solicitor was contracted to provide legal advice, it was held to be privileged. In other words, LPP extends not only to the content of the legal advice but to the fact that a person sought legal advice on any particular matter.

Generic advice and information is privileged if it reveals the subject matter of the advice

The report on the trust arrangements was largely for the purpose of giving legal advice and was therefore covered by privilege. More interestingly, the Tribunal also held that the schedules to the report which contained: (i) extracts from legislation and draft legislation, (ii) generic advice provided to all of the solicitor's clients, and (iii) discussions (with parties other than the taxpayer) of a particular aspect of the law, were also privileged notwithstanding that they did not relate specifically to the taxpayer's position. This was because, if disclosed, these schedules would identify the subject matter and, to some degree, the content of the legal advice given.

Please click on the links below for the other articles in the November 2013 tax newsletter.

• Compensating adjustments legislation
• Proposed changes to the Parent-Subsidiary Directive
• Cotter: loss carry-back claims
• Versteegh: unallowable purpose
• Prudential: restitutionary remedies and compound interest
• Felixstowe Dock: consortium relief claims
• Ingenious: taxpayer confidentiality
• Employee shareholder status: briefing