Tax-advice secrecy rights expanding

By IRENE CHAPPLE

The Government has thumbed its nose at recommendations from the Law Commission to dump aspects of privilege surrounding tax advice.

Instead, it has suggested that such privilege rights be extended to all professional advisers.

At present, the Inland Revenue Department cannot get access to most tax advice lawyers give clients.

Accountants, however, do not have the benefit of such protection.

Last week, the Treasury released a discussion document suggesting that privilege be extended to advice given by members of approved professional bodies to their clients.

Although it recommended greater disclosure of factual information, it suggested that any opinion given by professional advisers should remain confidential.

It also said the existing litigation privilege, when the matter is coming before the courts, should continue, as it allowed litigants to give a "candid account of their position to their lawyer without the risk of disclosure."

In 2000, the Law Commission said the right to keep secret advice passing from lawyer to client should be extended to all professional advisers, but should be confined to matters in litigation.

The latest proposal has been welcomed by the Institute of Chartered Accountants, which has sought such a change for six years.

A tax adviser in Finance Minister Michael Cullen's office said the issues raised came from the Law Commission's report but the Government had come to a different view.

The closing date for submissions is July 31.

Discussion document: "Tax and privilege: a proposed new structure"