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HMRC internal manual

Compliance Handbook

Information & Inspection Powers: Conditions and safeguards: Restrictions: Tax advice: what is tax advice

Tax advice is the opinion of an adviser on the effects of tax law on potential or actual transactions. Such advice on tax law from an accountant or other non-lawyer is not legal advice privileged, see CH22244 so it does not fall under the restrictions described at CH22246. But it is sensitive as accountants regard these papers as confidential.

Tax advice is rarely relevant to your examination of a tax position or tax liability but can be very valuable in avoidance or suspected avoidance cases. In particular, tax advice may be relevant where

  • there is a purpose test in the legislation,
  • you wish to consider purposive construction of legislation and/or to look at the reality of a transaction or
  • the arrangements do not comply with anti-avoidance rules including the General Anti-Avoidance Rule (GAAR).

Tax advice does not cover

  • engagement letters
  • general marketing material about a tax avoidance scheme
  • communications or parts of communications between an advisor and their client which do not cover tax advice
  • evidence of when or how transactions took place
  • notes of any internal meetings at which decisions are made and at which advice was not an issue (for example, board meetings where the tax advisor was not present)
  • calculations, costing and economic analysis, structures and plan diagrams.