Irish tax litigation – update on the role of privilege

Legal privilege is the entitlement of a party to refuse to disclose documents to another party, often in the context of a dispute, including before the Tax Appeals Commission (TAC). For further detail on the TAC process, see our insight or for further detail on the High Court process, see our insight. While the rules relating to legal privilege apply to tax payers in the same way as to all individuals and companies, it is important for taxpayers to be mindful of the Revenue Commissioners’ protocol for the treatment of documents over which a claim of LPP is made in the context of a regulatory search carried out by Revenue.

Overview of Legal Professional Privilege (LPP)
Legal professional privilege (LPP) exempts clients from disclosing communications that may otherwise be required to be revealed. This includes disclosure obligations that might arise as between a taxpayer and the Irish Revenue Commissioners (Revenue). For tax disputes and investigations, the two most relevant types of LPP are Legal Advice Privilege and Litigation Privilege:

1. Legal Advice Privilege (LAP)
   LAP protects confidential communications between lawyers and their taxpayer clients that are exchanged for the dominant purpose of seeking or receiving legal advice. LAP is rooted in the core principle that clients must be able to openly and honestly communicate with their lawyers, and those communications should be protected from disclosure.
   Scope of the term 'legal advice'
   The Irish courts have drawn a clear distinction between communications involving the seeking or giving of legal advice, which are privileged, and those seeking or providing legal assistance, which are not privileged.[1] For example, LAP may be claimed over a request for advice from a lawyer that is expected to express an opinion on legal rights, remedies, obligations, or consequences, whereas commercial advice or administrative input from a lawyer on a tax or transactional issue will not support a claim of LAP.
   Scope of the term 'client'
   Where the client is a company, it cannot be assumed that all employees of the organisation will be considered the 'client' for the purpose of asserting LAP. Only employees who are charged with obtaining and receiving legal advice on behalf of the organisation, or who have an interest in the legal advice in question, will be able to rely on legal advice privilege. Legal advice should therefore only be shared within organisations with a limited group of people who can be demonstrated as having an interest. As a practical matter, it is important for organisations to ensure that legal advice is kept confidential, and to clearly identify employees and implement structured protocols to ensure that legal advice privilege is not inadvertently lost or waived.
   Scope of the term 'lawyer'
   The Irish courts have held that the term 'lawyer', in the context of LAP, means solicitors, barristers, foreign lawyers and salaried in-house legal advisers (although the extent to which LAP will attach to communications between in-house counsel will depend on the particular facts). Recently, the Irish courts clarified that legal advice given by a retired solicitor who was on the roll of solicitors in Ireland but was without a practicing certificate, cannot be privileged, because such a solicitor would not be regulated, or insured.[2]
   LAP will not extend to communications between a taxpayer and a non-lawyer, such as an accountant or tax adviser. This is particularly important for taxpayers to understand when seeking advice on an issue at the early stages of a potential tax dispute or more generally as regards sensitive tax matters.

2. Litigation Privilege (LP)
   With the exception of certain circumstances due to the expansion of regulatory powers as set out below, LP protects from either disclosure of or reliance on by a third party, such as the Revenue Commissioners, confidential communications between a client and its lawyer; or between the client and third parties; or between the lawyer and third parties when the dominant purpose of the communication is the furtherance of actual or reasonably apprehended litigation, or a regulatory or criminal investigation.
   Unlike LAP, LP can therefore apply to communications between a taxpayer and third parties, such as an accountant or tax adviser, provided the other conditions are met. In practice, when a claim of privilege is being challenged, a court deciding whether to uphold the claim of privilege will assess the dominant purpose of the communication objectively, having regard to the motivation of the party who made the communication.

    

Temporal limitations
In some instances, a party may be entitled to claim either LAP or LP (e.g. a document generated for the purposes of seeking legal advice on a taxpayer’s obligations in an investigation). It is important to bear in mind that LAP will endure indefinitely beyond the investigation (unless waived or lost), whereas LP will not extend beyond that investigation or very closely related litigation.
Loss or Waiver of LPP
LPP can be lost or waived through disclosure. Where disclosure is inadvertent, the Irish courts may in certain circumstances uphold a claim of privilege but the taxpayer may need to act swiftly to seek protection from the Court.
Common interest privilege
Common interest privilege (CIP) is an exception to the general rule against dissemination. LPP will not be lost where a document covered by LPP is shared with another party who has a genuine common legal interest in the contents of the document, such that the disclosure of the documents does not constitute a waiver of privilege. It is recommended that, where possible, a formal agreement between the parties to preserve the CIP be entered into before documents have been shared, and that communications sharing such advice should be marked appropriately. 
For a more detailed note on Legal Professional Privilege, see our insight.

Eroding the ability to rely on LPP in light of expanding regulatory powers
The High Court recently signalled a potential erosion of the taxpayer’s ability to rely on LPP in the face of expanding investigative powers being granted to regulators.
In Commissioner for Communications Regulation v Eircom Limited [2024] IEHC 49, in circumstances where a regulator had been granted extensive investigation powers of search and seizure by the legislature, the Court placed particular emphasis on the existence of those powers and determined they should not be “set at naught” by claims of LPP. The relevant legislation did provide that the confidentiality of information seized in a “dawn raid” by the regulator would be “maintained”. In order to maintain confidentiality, the Court found that it was the regulator, and not the regulated entity, that was entitled to conduct keyword searches on the gathered data in order to remove privileged or irrelevant material before the investigation proceeded. Therefore, where regulatory powers directly conflicted with the rights of the regulated entities with regard to LPP, the Court was reluctant to prioritise claims of LPP which might undermine the regulator’s powers. 
Following this decision, in January 2025, Revenue issued updated guidance outlining how it will treat material over which a claim of LPP is made by a taxpayer, or their legal representative, in the context of a regulatory search carried out by Revenue pursuant to the Taxes Consolidation Act 1997. 
Where a taxpayer, or their legal representative, believes that a seizure may disclose confidential material, they must provide sufficient information to: (1) enable the warrant holder i.e. Revenue, to identify the relevant material; and (2) outline why the seizure may conflict with LPP. The warrant holder will then determine if it is reasonable to address the claims onsite or post-search.
If a claim of LPP is made during a search in relation to:

• Hard copy material: The records should be retained securely by Revenue. Revenue will then explain to the taxpayer how the documents will be stored to ensure confidentiality of the material pending an independent determination of its status.
• Soft copy material: Revenue can request that the forensic expert listed on the warrant can store the material separately in Revenue’s Information and Communications Technology and Logistics Division, pending an independent determination of its status.

If a claim of LPP is made subsequent to a search, the guidance states that this should be brought to the attention of the Revenue Solicitors Division. The status of any such material will then be independently determined.
Although the process of independent determination is not set out in the report, the guidance mirrors the approach adopted by other regulators with similar investigative powers following the ComReg v Eircom decision. It is likely that this approach will be subject to judicial scrutiny in future cases.

Conclusion
Whilst LPP can often-times cause confusion for taxpayers in assessing what material is protected, the right to assert LPP is an important one which should be asserted to ensure the best possible outcome in tax disputes and investigations. Where taxation matters have the potential to become contentious, the engagement of lawyers as soon as practicable to work with the taxpayer and other advisors as necessary is recommended, so as to ensure that the taxpayer can avail of the right. 
For more information on the subject matter of this note, please contact Enda Hurley, Partner, Cecelia Joyce, Senior Associate, Rebecca Martin, Senior Associate, Amie Creaton, Solicitor or any member of A&L Goodbody's Disputes and Investigation team.

Date published: 9 October 2025