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HMRC internal manual

Compliance Handbook

How to do a compliance check: establishing the facts: asking for information: legally privileged documents

Like medical records, legally privileged documents are afforded special protection. This comes principally from common law, backed up by the Data Protection Act 1998, Article 8 Human Rights Act 1998 and FA08/Sch36/Para23. It follows that there is a strong presumption in favour of privacy of legally privileged documents and the same care should be taken when considering whether such documents are “reasonably required”.

If a legal professional asserts his client’s privilege as a reason for non-compliance with a notice, the tax case R v Special Commissioners and another ex-parte Morgan Grenfell & Co Ltd, which concerns a Board’s notice issued under TMA70/S20(2) and legal professional privilege (LPP), might help explain HMRC’s approach. Although HMRC lost the point at issue in that case, commenting on the earlier case ex parte Taylor (62 TC 578) Lord Hoffman concluded

“In consequence, I do not think that the disclosure of the documents by Mr Taylor [the solicitor] in confidence for the limited purpose of determining his own tax liability infringed any LPP vested in his clients. If I am wrong about this and technically it did, then I think that to that limited extent the statute can be construed as having authorised it.”

Please note that this guidance extends only to claims for protection of the legal professional’s clients’ privilege. HMRC is not entitled to obtain documents in respect of which the legal professional is personally entitled to LPP.

Technical guidance about LPP starts at CH22240.

Operational guidance about resolving disputes about LPP starts at CH230000.