On 30 October 2026, HMRC issued a detailed policy paper outlining its approach to legal professional privilege (LPP) in the context of tax avoidance investigations. The document responds to recent tribunal decisions, notably the Bilta v RBS line of authority, and sets out the circumstances under which HMRC will challenge claims of privilege over communications between taxpayers and their legal advisers. The guidance distinguishes between litigation privilege and legal advice privilege, emphasizing that privilege does not extend to communications furthering a tax avoidance scheme that falls within the General Anti-Abuse Rule (GAAR) or targeted anti-avoidance provisions.
Key Takeaways
- Privilege Boundaries Defined: HMRC confirms it will not accept LPP claims for documents created solely to facilitate a tax avoidance arrangement, particularly where the arrangement lacks commercial substance or is contrived.
- Disclosure Expectations: Taxpayers and advisers are expected to make voluntary disclosure of privileged material when requested under Schedule 36 FA 2008 information powers, subject to independent legal review.
- Impact on Advisory Practice: Law firms and tax advisers must reassess document retention policies and client communication protocols to mitigate the risk of privilege being set aside in future avoidance enquiries.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement