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Tribunal orders law firm to disclose advice after finding client waived privilege in appeal papers

HMRC: Objected to prior disclosure

A law firm has been ordered to reveal to the tax man aspects of the advice it gave to a client after a tribunal found that the client had waived privilege in its grounds to bring an appeal out of time.

However, to ensure that advice irrelevant to the issue at hand was not disclosed, the tribunal said it would review all redactions considered appropriate by Milton Keynes firm Altion Law.

The firm had been advising ‘D’ Cash & Carry Ltd (DCC) on an application under HM Revenue & Customs’ (HMRC) alcohol wholesaler registration scheme.

This was refused, with HMRC notifying DCC and Altion that they had 30 days to appeal. Two months later, DCC’s new solicitors applied to appeal out of time, saying that when the letter was received, the company was representing itself and did not appreciate the deadline or the implications of not complying with it.

HMRC sought evidence that Altion was not acting at that time, but DCC then tried to “clarify” its position by applying to amend the grounds of appeal to say that Altion Law did not provide it with advice in relation to appealing HMRC’s decision, including not mentioning the 30-day time limit.

HMRC asked Altion to confirm this, but DCC refused to waive privilege, and so it went to the tax tribunal to seek an order that Altion provide the information.

It argued that DCC had impliedly waived privilege by introducing the advice received, or not received, from Altion in both the amended grounds of appeal and a second witness statement from a director, a Mr Dhami.

Judge Amanda Brown agreed [1]. It was “patently clear” that DCC had “not simply referenced the interaction with Altion, they have described the nature of the discussion and the absence of advice”.

“Their whole case for an out-of-time appeal is predicated on that lack of advice so as to excuse their failure to act within the statutory time limits…

“For the application to be fairly and justly considered the role played by Altion and establishing the true position for the delay needs to be established and that will be achieved only through information and documentation held by Altion…

“The question of fairness requires that HMRC be entitled to cross-examine Mr Dhami as to the veracity of the case he presents on behalf of the appellant for why the appeal was not made in time. To do so HMRC need access to evidence of the communications between Mr Dhami and Altion.”

DCC sought prior disclosure of the documents to ensure they did not contain information not relevant to the issue. HMRC objected.

Judge Brown said: “In view of the risk that documents containing evidence of communication between Altion and the appellant may contain material not pertinent to the question of whether and if so what advice was given to the appellant in connection with the need to appeal and the time limit for doing so, the tribunal has determined that to the extent that Altion consider redaction appropriate the suggested redactions will be provided for review and determination by the tribunal.

“This protects the appellant and should assuage the concerns of HMRC.”