Should Accountants Have ‘privilege’?

The Court of Appeal of England and Wales will be considering whether accountants should benefit from something like solicitor-client privilege, at least when they are giving advice on matters like taxes. The story is here, noting that the Law Society of England and Wales has been given leave to intervene. The Law Society opposes any extension of privilege.

The trial court held that there was no privilege so the tax authorities could require disclosure of discussions between the accountants and the client.

Should privilege be extended? I am not aware that any such claim has been made in Canada, but I could be wrong. What do you think?

P.S. I accept that my title might be more accurately, though less dramatically, ‘should the clients of accountants benefit from privilege?’, since the privilege ‘belongs’ to the client, not to the professional.


  1. I say this as a business owner: I see tax planning as a team effort and a cross-over between disciplines, and would like to see privilege extended. Tax lawyers and tax accountants frequently work together, and each discipline benefits from the other side. Most tax lawyers complete the CICA in depth tax course, and most Tax Accountants work closely with legal counsel verifying their planning efforts.

    Just personal opinion here, but if there was a way to qualify these types of tax planning teams, it makes sense to extend privilege. Especially for lawyer-accountant-client communication.

  2. David Cheifetz

    What about customs brokers who advise their clients on the best way to import or export goods at the least tax rate. Isn’t that broker-client relationship as equally deserving of privilege as is the accountant-client relationshp. What about financial advisors who aren’t accountants or lawyers who advise their clients on ways to structure their financial affairs so as to minimize taxes. Same question.


  3. Well it’s not as if this is unexplored territory in Canadian law. The Federal Court of Appeal has rejected the idea twice, in Baron [1991] 1 F.C. 688, [1991] 1 C.T.C. 125; 45 D.T.C. 5055 and Tower.

    The academic literature appears to have three items, though there may be much more in the tax and accounting databases. Paton, Paul D.
    Accountants, privilege, and the problem of working papers(2005) 28 Dal. L.J. 353-384; Extending privilege to accountants: should we follow the American lead? William R. Lawlor. (Annual 1998)Conference Report (Canadian Tax Foundation): pCH4(22; A question of privilege: confidential communications and the public accountant. Ivan F. Ivankovich. 23.n2 Canadian Business Law Journal(April 1994: 201-238.

    Finally, as I was taught years ago in law reform and policy development, the extension of every privilege prevents the court from having access to the evidence it needs. The Wigmore test is suitably strict:

    (1) The communications must originate in a confidence that they will not be disclosed.

    (2) This element of confidentiality must be essential to the full and satisfactory maintenance of the relation between the parties.

    (3) The relation must be one which in the opinion of the community ought to be sedulously fostered.

    (4) The injury that would inure to the relation by the disclosure of the communications must be greater than the benefit thereby gained for the correct disposal of litigation.

    (See John Henry Wigmore, Evidence in Trials at Common Law, Vol. 8, McNaughton Revision (Boston: Little, Brown, 1961), at page 527.)

  4. Of course, if we’re jousting at hobbyhorses, then let’s give Jeremy Bentham his due:

    Merely with a view to rectitude of decisions, to the avoidance of the mischiefs attached to undue decision, no species of evidence whatsoever, willing or unwilling, ought to be excluded: for that although in certain cases it may be right that this or that lot of evidence, though tendered should not be admitted, yet in these cases the reason for the exclusion rests on other grounds; viz., avoidance of vexation, expense and delay.

    And Bentham famously was opposed to lawyer-client privilege, though he did think a case was to be made for protecting confessions to catholic priests : see Rationale of judicial evidence: specially applied to English practice, Volume 4 by Jeremy Bentham at 586.

    The rationale was strict utilitarian consideration of whether the specific benefits of protecting a professional relationship outweighed leaving a court with potentially relevant but inadmissible evidence.