Most freelancers assume that what they tell their Contractor Accountants is legally confidential just as it is confidential between yourself and your lawyer. However, this is not so.
In a landmark case a judge has said that the old principle of confidentiality applies only to lawyers and not to specialist Contractor Accountants. He said it was not up to judges to make this relationship confidential. It was up to Parliament.
Your specialist Contractor Accountant has, legally, to reveal what he or she tells you and you legally have to reveal what he or she has told you. It’s not confidential. This landmark ruling comes in a case between the Prudential and HMRC. The ruling by the Supreme Court was by the margin of 5-2.
Predictably HMRC said “Tax avoiders should not be able to conceal their true intentions or arrangements from us”. Most freelancers would have assumed that what you say to your Contractor Accountant stays with him or her and they would not be forced to reveal it to HMRC or a court at a later date.
It also works the other way. If your specialist contractor Accountant gives you advice and you act on it they would legally be obliged to tell HMRC or a court what advice they gave you. One would think that it would now be more dangerous for Accountants to give contractors advice on tax avoidance for one thing and that is why HMRC appear to be delighted with this judgement.
Specialist Contractor Accountants won’t be so pleased with this nor will freelancers. It was assumed that the relationship was confidential. It will make them both more cautious about what they say to each other.
If the freelancer gives the Contractor Accountant some information about his or her tax affairs the Accountant could be forced to reveal what that information was at a later date. It is not confidential.
This new ruling is full of pitfalls. It may be that specialist Contractor Accountants try to get some sort of legislation in front of Parliament – but till then there is no Accountant / client confidentiality.
For a review of some good Accountants see Which Contractor Accountant