Exploring legal professional privilege for tax practitioners
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Tax is a complex subject that affects each and every taxpayer and, because of the complexity of certain tax issues, an increasing number of taxpayers are consulting tax practitioners to provide them with a professional opinion on what the correct tax treatments are, of certain transactions. If the South African Revenue Service (SARS) does not agree with the treatment of a transaction, SARS is allowed to request that the taxpayer provides all material relevant to the transaction, but if that material is subject to legal professional privilege (LPP), the taxpayer need not provide the material to SARS. The current standing in South Africa (SA) is that only the tax advice provided by legal advisors qualifies for LPP, while tax advice provided by accountants does not. The question that this paper has undertaken to answer is whether there are sufficient grounds to possibly extend the privilege to accountants. The evaluation found that there are reasonable grounds to extend the privilege to cover tax advice provided by accountants. As there are, however some practical obstacles to implement this policy, another form of privilege could rather be granted to tax advice provided by accountants, in the form of a statutory right to limit SARS’s access to the tax advice provided by accountants to a taxpayer.