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Mike is an award-winning financial expert and a well-known leader in the financial industry.Having taken two of his previous firms to Chartered Status in the UK and also achieved the prestigious National IFA of the Year Award – Highly Commended.In addition, Mike is a well known Independent Financial Adviser and Money Coach. Qualified to UK Financial Conduct Authority (FCA) standards, a member of the Chartered Insurance Institute, a Founding Fellow of the Institute of Sales Professionals (FF.ISP), a Fellow of the Institute of Directors (FIoD) and featured as a highly qualified Financial Adviser in Which Financial Adviser.

Pru Loses Tax Shield Case In Supreme Court

Mike CoadyFinancial News Pru Loses Tax Shield Case In Supreme Court

Pru Loses Tax Shield Case In Supreme Court

Legal privilege does not apply to accountants or tax advisers to protect them from disclosing information about advice they may have given clients on tax mitigation, the Supreme Court has ruled.

They must now hand over documents on any tax mitigation scheme they promote, should HM Revenue and Customs (HMRC) ask.

It also means that wealthy investors cannot use the legal defence to protect the disclosure of advice they may have received from their tax advisors or accountants.

This follows a legal challenge by Prudential to prevent HMRC looking at documents on a scheme run by accountancy firm PriceWaterhouse Coopers which reduced the firm’s tax liabilities on the firm’s business in Gibraltar.

The scheme’s aim was to create a ‘tax deduction’ which could be set off against the firm’s profits – which would otherwise have been liable for corporation tax in the UK.

Only lawyers are protected

When HMRC asked Prudential for documents relating to the scheme, the company refused to hand some over stating they were covered by legal privilege.

Special authorisation from tax commissioners was given for the documents to be produced, but this prompted the firm to launch a judicial review which was rejected and an appeal was also quashed.

Prudential had tried to argue that legal advice covers any professional advisor who gives advice on an issue relating to law and, as such, a tax accountant would also be covered as legal professionals would.

The Supreme Court ruled that legal advice privilege cannot be extended beyond lawyers as the law stands.

For it to do so would take an Act of Parliament and that is going to be unlikely.

James Bullock, an expert in tax litigation at Pinsent Masons, said legal privilege only covered barristers and solicitors giving advice because they are ‘professionally qualified and rigorously regulated’.

No safeguards

He added: “That’s not to say that other professionals giving advice on matters of law are not, but the principle of legal protection needs to be maintained.”

In the judgement, the Supreme Court also said that extending privilege would create uncertainty in areas where the law is very clear.

Mr Bullock said the court’s decision would interest many professional advisers.

He said: “So far everyone has focussed on what it means for tax advisors and accountants but there’s also an issue for other professionals who offer advice on ‘the law’ such as surveyors and planning consultants.”

Their advice would not be protected, he said, even if it was identical to that given by a lawyer.

Mike Coady
Mike Coady

Mike is recognised at the forefront of financial planning as a financial advice mentor who demands only the best outcomes for both individuals and businesses he works alongside.

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