The House of Lords has reversed the controversial Court of Appeal
decision in R (on the application of Morgan Grenfell & Co Ltd) v
Special Commissioner [2002] UKHL 21 in relation to legal professional
privilege, “a fundamental human right”, and affirmed its importance as a
corollary to the right to legal advice.
Morgan Grenfell operated a tax-related scheme in which it obtained a
long leasehold interest in a property owned by a client and leased it back
to the client under a sub-lease with a substantial tax saving. However,
the Inland Revenue believed that the purchase fell outside the scope of
its trading activities and as such was a capital asset. Morgan Grenfell
refused to hand over to the inspector documents relating to advice
obtained from counsel and solicitors, arguing that they were subject to
legal privilege, and the inspector successfully applied for permission to
issue a
