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HMRC have published new regulations about whether information the department requests can be withheld by legal professional privilege.
The regulations are in SI 2009/1916 which became effective on 7 August 2009. They apply where the Revenue has given an information notice to a person and there is a dispute about whether the requested document can be withheld due to legal professional privilege.
The aim is to provide a clear method to resolve these disputes.
HMRC will amend technical guidance and add new operational guidance to their Compliance Handbook in September 2009. Meanwhile they have published Business Brief 54/09 to give an overview of the new system.
As readers will know, from 1 April 2009, under FA 2008, Sch 36, HMRC have one set of powers covering capital gains tax, corporation tax, the construction industry scheme, income tax, PAYE and VAT to visit business premises to inspect the premises, assets and records, and ask taxpayers and third parties for information and documents.
One restriction of these powers is that an HMRC officer cannot require a person:
- to provide privileged information; or
- to produce the privileged part of a document.
If an HMRC officer asks an unrepresented person for documents where legal professional privilege may be an issue, he should explain what documents may be protected by privilege.
The person or anyone acting on his behalf shall specify in a list each disputed document or type of document so they can be identified. They should send the list to HMRC by the deadline given in the information notice.
The officer should check the list and identify:
- items they accept are privileged;
- documents they do not need to see;
- documents that they still need to see.
The officer then needs to contact Central Policy or the HMRC solicitor for advice about items they still need to see. If either agrees some of these documents are not covered by privilege, the officer:
- explain why he thinks the document is not privileged;
- tell the person he must send the document unless he disagrees with HMRC’s view;
- tell the person what he needs to do if he wants the tribunal to decide whether the document is subject to legal professional privilege.
The person must make an application to the tribunal within 20 working days of the date of the HMRC letter.
It will be unusual for an officer to give an information notice at a visit. If the person has an adviser the officer should give him the opportunity to contact the adviser.
If the person is unrepresented, and privilege may be an issue, the officer should explain what documents may be protected by legal professional privilege.
If there are disputed documents the person should place them in a container that prevents the documents being seen, and then seal, label and sign it. The officer will countersign and take custody of the container.
The officer must ensure that container, with its seal intact, reaches the tribunal so it can resolve the dispute. Although the deadline is 42 working days they should aim to do this within 20 working days.
If the documents are in electronic form the officer may be prepared to accept copies (see Compliance Handbook 23360).
