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Fresh Revenue guidance on privileged material

Lawyers at Arthur Cox have highlighted recently updated guidance from Revenue on the powers of authorised officers to apply for search warrants.

The guidance also covers how Revenue should treat material over which a claim of legal professional privilege is made by a taxpayer or a taxpayer’s legal representative.

The Arthur Cox lawyers say that the guidance is in line with High Court ruling last year involving communications regulator ComReg and telecoms company Eir.

‘Dawn raid’

During a ‘dawn raid’, ComReg seized thousands of documents from Eir and proposed to filter out legally privileged information through electronic searches.

Eir argued that it should conduct these searches itself to protect any confidential and legally privileged information.

The High Court found, however, that ComReg was not required to return the documents and was entitled to conduct its own search.

Confidential information

According to Revenue guidance, where a taxpayer or legal representative believes that a seizure of material in hard or soft copy may disclose confidential information, they must:

• Allow the holder of the search warrant to identify the relevant material, and
• Outline the reasons why the seizure of the material may conflict with legal professional privilege.

The warrant holder will determine whether a claim of legal professional privilege or privacy can be addressed onsite if it is reasonable to do so.

If it is not reasonable to deal with claims during the operation of the search, the warrant holder will inform the taxpayer of the process by which a review of the material will be conducted and who will carry out the independent review.

If privacy or legal professional privilege is claimed after a search, or a review by an authorised officer identifies material that may be subject to privilege, this is to be brought to the attention of Revenue Solicitors Division. The status of any material will then need to be independently determined.

Revenue’s ‘increasing reach’

The Arthur Cox lawyers say that the Revenue guidance does not explain how it is envisaged this process would proceed, describing the legal basis for Revenue’s approach as “uncertain”.

“Revenue’s guidance mirrors the policies adopted by other regulators with similar investigative powers following recent judicial decisions, which may be subjected to further scrutiny in future cases by higher courts,” the lawyers state.

They add that the guidance, along with other developments in case law, emphasises the increasing reach of Revenue investigative powers and “the subsequent erosion of taxpayer rights”.