Why Legal Privilege matters in an HMRC Dispute

If you are facing a dispute with HMRC, you will likely need a significant amount of professional advice, sometimes over a period of many months or even years. In that situation, one of the biggest advantages of working with a lawyer is that, in most cases, your correspondence and discussions cannot be demanded and produced in litigation or to HMRC because they are protected by a doctrine known as ‘legal professional privilege.’

 

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

 

What is Legal Professional Privilege?

Legal professional privilege is a legal right that belongs to you, the client, and not to your adviser. It protects certain types of confidential communications between you and your lawyer from being disclosed, even if HMRC, a tribunal, or a court asks for them.

The idea behind legal professional privilege is that you can be completely open with your solicitor about your situation, including the parts you are most worried about, without fearing that those conversations will later be used against you.

There are two main types of legal professional privilege: legal advice privilege and litigation privilege. Legal advice privilege covers confidential communications between you and your lawyer where the dominant purpose is to obtain or give legal advice about your rights, obligations, and options. Litigation privilege applies where litigation with HMRC is reasonably contemplated or underway, and it can extend to confidential communications between you, your lawyer and third parties (for example, an expert accountant), provided that they are prepared for the dominant purpose of that litigation.

 

Why this matters in an HMRC Dispute

HMRC has wide powers to demand sight of taxpayers’ information and documentation, and tax tribunals expect a high level of cooperation and disclosure. Legal professional privilege is one of the few exceptions to those powers. Where privilege applies, your lawyer is entitled, and in fact obliged, to refuse to disclose the protected material, unless you choose to waive privilege.

In a practical sense, that means:

  • Letters, emails, and notes recording your discussions with your solicitor about the strengths and weaknesses of your position are generally protected.
  • Drafts of letters to HMRC, internal strategy memos, and risk assessments created by or for your solicitor may also be covered.
  • If your solicitor instructs an accountant or other expert as part of a contemplated tribunal appeal, many of those communications can fall within litigation privilege.

The upshot of legal professional privilege is to create a much safer environment for you to explore your options honestly, test different scenarios, and receive clear, unfiltered advice about risk, settlement and the prospects of success on appeal, without having to self‑censor for fear that a document might end up in HMRC’s hands.

 

Who does Legal Professional Privilege apply to?

As a general rule, legal professional privilege applies only to communications with members of the legal profession (such as solicitors and barristers) acting in their capacity as legal advisors. This means that, although other professionals, such as accountants, might be heavily involved in your tax affairs, your dealings with them are not protected from disclosure to HMRC.

In fact, even where accountants give detailed tax advice that feels very similar to legal advice, their guidance will not usually be protected by legal professional privilege. If HMRC or a tribunal asks for those documents, they may well have to be produced. That can include advice letters, risk assessments, internal notes and working papers. While there are limited exceptions in specific contexts, accountants do not benefit from the same broad, well‑established protection as solicitors do.

 

What does this mean in the context of your Dispute with HMRC?

When it comes to HMRC disputes, taxpayers are often confused about where they should turn for advice. For many, legal professional privilege is often a decisive factor; the comfort they gain from knowing that they speak openly to their advisor without fear of those discussions becoming known to HMRC is a key factor in their decision to work with experienced HMRC lawyers like ours.

By instructing a law firm like Altion to advise you in connection with your HMRC dispute, you can:

  • Keep the core legal analysis and strategy safe from unwanted attention.
  • Ensure that all written and oral engagement with HMRC is carefully managed from a legal and strategic standpoint.
  • Have your solicitor instruct other professionals, like your accountant, where expert input is needed for a contemplated dispute, helping to bring those communications within litigation privilege where possible.

Sometimes, the most effective approach is a team effort. Your lawyer understands the rules about disclosure, privilege, litigation strategy and how HMRC and the tribunals are likely to approach your case. Your accountant understands your business, your records and your historic returns. By working together, they can secure the best possible outcome for you. By placing your solicitor at the centre of the advisory team, you can rely on legal professional privilege to protect the most sensitive parts of your case.

 

Other reasons to involve a Lawyer in your HMRC Dispute

While the benefits of legal professional privilege are plentiful, working with the experienced HMRC solicitors and barristers at Altion Law offers a range of additional benefits, including the following:

  • Our lawyers are trained and authorised to conduct litigation and advocacy before the tax tribunals and higher courts, which is crucial if your case moves beyond the enquiry stage.
  • Our lawyers can advise you not just on the immediate tax issue, but on the wider legal implications for your business.
  • Our lawyers understand the complex legal landscape of tax law and can apply the myriad of rules and regulations to your situation.
  • Law firms are heavily regulated, with strict duties of confidentiality, independence and acting in your best interests, offering an additional layer of protection and reassurance.

 

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.