DAC Beachcroft LLP
| Jurisdiction | UK Non-devolved |
| Judgment Date | 06 September 2018 |
| Neutral Citation | [2018] UKFTT 502 (TC) |
| Date | 06 September 2018 |
| Court | First Tier Tribunal (Tax Chamber) |
[2018] UKFTT 0502 (TC)
Judge Kevin Poole
Corporation tax – Information notice seeking documents concerning property transactions to assist in establishing location of central management and control of company – Conveyancing file of solicitors acting on purchase – Legal professional privilege – Information Notice: Resolution of Disputes as to Privileged Communications Regulations 2009 (SI 2009/1916).
The First-Tier Tribunal (FTT) found that a limited amount of documentation was not subject to Legal Professional Privilege in respect of a 3rd party notice.
This decision concerned an application by DAC Beachcroft LLP (“the Applicant”) pursuant to reg. 5 of the Information Notice: Resolution of Disputes as to Privileged Communications Regulations 2009 (SI 2009/1916) (“the RDPC Regs”) for the resolution of a dispute as to whether certain documents sought by HMRC under a third party notice from the respondent (under FA 2008, Sch. 36, para. 2) were privileged from disclosure by virtue of para. 23 of that Schedule.
The documents in question all formed part of the conveyancing files of a predecessor firm of the applicant which were in the applicant's possession and related to the predecessor firm's involvement in acting as conveyancing solicitors for the purposes of the acquisition of three properties in London and subsequent disposal of two of them. The three properties were purchased in the names of three separate offshore companies (called “OC1”, “OC2” and “OC3”), but HMRC have been made aware of the involvement of a different offshore company (“OC4”) in at least two of the purchases, and sought to establish whether or not that company was centrally managed and controlled in the UK.
The applicant asserted such entitlement as the former clients might have to claim legal professional privilege in respect of the documents sought by HMRC, so precluding them from providing copies of the privileged documents to HMRC pursuant to the information notice that had been served.
This application related to documents brought into existence as part of the conveyancing files of KSB Law LLP (also known as Kingsford Stacey Blackwell) (“KSB”) when acting as conveyancing solicitors on the purchase of three properties in London and the subsequent sale of two of those properties. The addresses of the properties were not relevant so they were referred to as “No. 1”, “No. 2” and “No. 3”. KSB acted on the purchase of No. 1 in 2000, and on the purchase and sale of No. 2 and No. 3 in 2006–07. OC1 was registered at HM Land Registry as registered proprietor of No. 1, and OC2 and OC3 were similarly registered in relation to No. 2 and No. 3 respectively. HMRC understood, from a disclosure report made to them under the Liechtenstein Disclosure Facility, that OC4 had loaned the purchase price to OC1 and OC2 to finance the purchases of No. 1 and No. 2 respectively. From copies of the purchase contracts provided to HMRC by the applicant, it was apparent that OC4 was the contractual purchaser for both No. 2 and No. 3, but those purchases were subsequently completed in the names of OC2 and OC3. In seeking to establish where the central management and control of OC4 resided, HMRC wrote to the applicant on 2 May 2017, informing it that they were proposing to issue a third party information notice seeking “All correspondence including emails relating to the purchases”.
The applicant responded on 23 May 2017, claiming Legal Professional Privilege. By letter dated 1 November 2017, HMRC responded, disputing that privilege applied to any of the documents.
The Court summarised the relevant legislation and the general law as to privilege particularly with regard to legal privilege and the discussion of the Three Rivers No 6 Case in the Supreme Court following the BCCI collapse. In this, four features of legal advice privilege were set out: LAP arises out of a relationship of confidence between lawyer and client. If the communication or document in question was not confidential, LAP cannot arise in relation to it. If LAP applies, it applies absolutely. It cannot be overridden by some “supposedly greater public interest”, though it can be waived by the person entitled to it, and it can be overridden by statute. LAP gives the person entitled to it the right to decline to disclose (or allow to be disclosed) the confidential communication or document to which it applies.
There was an undoubted relationship between LAP and litigation privilege, in the sense that some communications and documents could be subject to both forms; however, litigation privilege could be available for documents or communications which did not involve the seeking and giving of legal advice – for example, correspondence between a lawyer (or her client) and a third party.
The judge considered it clear, in the light of the decision in Three Rivers No 6, that the communications between KSB and their clients, to the extent they were for the purpose of seeking or giving advice in relation to the various conveyancing transactions, were properly subject to LAP. They involved advice on the clients' respective rights, liabilities, obligations or remedies under private law, and to the extent they did not specifically seek or provide actual legal advice, they largely comprised “that necessary exchange of information of which the object is the giving of legal advice as and when appropriate”.
Also included under the umbrella of LAP were similar communications with the clients' other UK solicitors and with their overseas lawyers in Bermuda. All communication between them and KSB consisted of seeking and giving legal advice specifically for KSB's clients and KSB were in communication with those lawyers on the express instructions of the clients for that purpose.
Certain of the correspondence under consideration comprised email exchanges between KSB and individuals who were not clients of KSB. It was clear from the content of the correspondence that those individuals were merely acting as the client's agents in corresponding with KSB for the purpose of obtaining and seeking KSB's advice, and LAP extended to communication by such means.
The judge therefore considered that all the documents were subject to LAP, to the extent they either sought or gave (or evidence the seeking or giving of) legal advice or were part of the “continuum aimed at keeping both [solicitor and client] informed so that advice may be sought and given as required”. However the judge listed ten documents which he considered did not attract LAP and so should be disclosed by the applicant to HMRC.
Privilege is an important concept in the disclosure of information. Therefore the judge went into an important analysis particularly by reference to the Three Rivers case. If this area is relevant further examination of the rationale and the list of actual documents to be disclosed will be useful.
[1] This decision concerns an application by DAC Beachcroft LLP (“the applicant”) pursuant to regulation 5 of the Information Notice: Resolution of Disputes as to Privileged Communications Regulations 2009 (SI 2009 No. 1916) (“the RDPC Regs”) for the resolution of a dispute as to whether certain documents sought by HMRC under a third party notice from the applicant (under paragraph 2 of Schedule 36 Finance Act 2008) are privileged from disclosure by virtue of paragraph 23 of that Schedule.
[2] The documents in question all form part of the conveyancing files of a predecessor firm of the applicant which are now in the applicant's possession and relate to the predecessor firm's involvement in acting as conveyancing solicitors for the purposes of the acquisition of three properties in London and subsequent disposal of two of them. The three properties were purchased in the names of three separate offshore companies (which I shall call “OC1”, “OC2” and “OC3”), but HMRC have been made aware of the involvement of a different offshore company (“OC4”) in at least two of the purchases, and seek to establish whether or not that company is centrally managed and controlled in the UK.
[3] The applicant asserts such entitlement as the former clients may have to claim legal professional privilege in respect of the documents sought by HMRC, so precluding them from providing copies of the privileged documents to HMRC pursuant to the information notice that has been served.
[4] Both the applicant and HMRC have expressed themselves content for the application to be determined without a hearing on the basis of written submissions which have been made by both parties.
[5] This application relates to documents brought into existence as part of the conveyancing files of KSB Law LLP (also known as Kingsford Stacey Blackwell) (“KSB”) when acting as conveyancing solicitors on the purchase of three properties in London and the subsequent sale of two of those properties.
[6] This application relates to documents brought into existence as part of the conveyancing files of KSB Law LLP (also known as Kingsford Stacey Blackwell) (“KSB”) when acting as conveyancing solicitors on the purchase of three properties in London and the subsequent sale of two of those properties.
[7] KSB acted on the purchase of No. 1 in 2000, and on the purchase and sale of No. 2 and No. 3 in 2006–07. OC1 was registered at HM Land Registry as registered proprietor of No. 1, and OC2 and OC3 were similarly registered in relation to No. 2 and No. 3 respectively.
[8] HMRC understood, from a disclosure report made to them under the Liechtenstein Disclosure Facility, that OC4 had loaned the purchase price to OC1 and OC2 to finance the purchases of No. 1 and No. 2 respectively. From copies of the purchase contracts provided to HMRC by the applicant, it is apparent that OC4 was the contractual purchaser for both No. 2 and No. 3, but those purchases were subsequently completed in the names of OC2 and OC3.
[9] The detailed facts of the...
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