UK Lawyers Fight Extension Of Privilege To Accountants

by Robin Pilgrim, LawAndTax-News.com, London

14 September 2004

Lawyers in the United Kingdom are fighting plans by the Home Office to extend legal privilege to accountants and other tax professionals in certain cases.

Under the UK's new anti-money laundering laws, professional intermediaries are obliged to report clients to the Inland Revenue if they suspect that tax evasion has taken place, and to the National Criminal Intelligence Service if they suspect that the client has been involved in money laundering activity. Professionals who fail to make suspicious activity reports face prosecution themselves.

However, if a client is on the verge of making good a mistake in tax reporting, lawyers are exempted from the requirement to report them to the authorities under privilege rules. The government is currently consulting on the extension of this exemption to "other relevant professional advisers", including accountants.

Although the news of the consultation was welcomed by the accounting community when it was announced earlier this year, many in the legal profession have argued that extension of the exemption could undermine the purpose of the 2003 Money Laundering Regulations. The reduction of the consultation period from sixteen weeks to eight has also been criticised, with many lawyers accusing the government of trying to rush through the change.

Speaking to the Independent at the weekend, Bar Council spokesman, John Cooper confirmed his organisation's position on the matter, observing that:

"The decision that accountants may not have to disclose something should not be up to them. They should have to disclose everything."

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