The First-tier Tribunal has judged that certain documents requested by HMRC in information notices issued under FA 2006, Sch. 36, para. 35 were subject to legal professional privilege and as such the applicants were not obliged to disclose any part of the disputed documents to HMRC (Refinitiv UK Holdings Limited and Anor v HMRC [2023] UKFTT 222 (TC)).
HMRC issued the Schedule 36 Notices during the course of its enquiries into the applicability of the diverted profits tax provisions at FA 2015, Pt. 3 to arrangements between certain subsidiaries of Refinitiv UK Holdings Ltd and a number of subsidiaries of Thompson Reuters Group Ltd (TR). TR had begun a process to help it shift from a “portfolio of businesses” to a true “enterprise” and a project was undertaken to transform the group to an “Enterprise Operating Model (“EOM”). It was considered that the ongoing transition to EOM provided an opportunity to ensure that TR’s transfer pricing was fully aligned with how the business operated and was consistent with the emerging thinking from the OECD. It therefore undertook a project to ensure tax was adequately considered as part of the overall EOM transition and engaged advisers to ensure that it was properly prepared for litigation in regard to its ongoing transfer pricing.
HMRC sought to obtain documents in respect of these matters.
Legal professional privilege is available in respect of either legal advice privilege or litigation privilege.
The FTT were granted access to the disputed documents and concluded that:
- litigation privilege did not apply as “given the comment of Nugee LJ in Frasers Group … which as decision of the High Court is binding on the First-tier Tribunal although not the Upper Tribunal, that litigation privilege cannot apply to the Disputed Documents which are primarily concerned with the implementation of an alternative corporate structure”; but
- advice privilege did apply to the disputed documents as “these do represent communications which are part of the continuum of communications with a dominant purpose of providing legal advice by TR Legal to TR’s senior decision makers.”
https://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08743.html
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In Schedule 36 Notices – HMRC Information Requests, tax barrister Keith Gordon encourages full compliance with legitimate requests from HMRC but also recommends that taxpayers should stand up to requests that do not meet the strict statutory criteria. The author reminds professional advisers of the risks of providing more information than the law requires.
