Prudential Loses U.K. Top Court Case Over Tax Advice

The U.K. Supreme Court said tax advice given to Prudential Plc (PRU) by accountants wasn’t protected by legal privilege and should be disclosed to the British government.

The U.K.’s highest court said only advice from lawyers was protected by the privilege, according to a press summary of the judgment today. When tax authorities asked Prudential for information about a tax avoidance scheme created by PricewaterhouseCoopers LLP, the company argued it didn’t have to hand over any documents containing advice from accountants.

“Accountants will be crying into their soup tonight, and tax lawyers will be dancing in the streets,” said Peter Clough, a partner at U.K. law firm Osborne Clarke. “The case presents a clear cut choice for clients: if you want confidential tax advice, you’re better off going to a law firm.”

Companies including Starbucks Corp. (SBUX) and Google Inc. (GOOG) have been criticized by lawmakers for trying to reduce their U.K. tax liabilities with complex accounting methods.

Prudential spokesman Robin Tozer and PwC spokeswoman Laetitia Lynn declined to comment.

“The right to see tax advice provided by accountants plays an important role in our work against tax avoidance,” Her Majesty’s Revenue and Customs said in an e-mailed statement. “Today’s decision is a good one for the majority of taxpayers who follow the letter and spirit of the law.”

To contact the reporter on this story: Kit Chellel in London at cchellel@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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Prudential Loses U.K. Top Court Ruling on Privileged Tax Advice

Chris Ratcliffe/Bloomberg

A pedestrian passes the Prudential Plc company logo, on display outside the company's headquarters in London.

A pedestrian passes the Prudential Plc company logo, on display outside the company's headquarters in London. Photographer: Chris Ratcliffe/Bloomberg