August 12, 2022


Let'S Talk Law

Constraints on Inland Profits Board’s Suitable to Audit Customer Accounts of Regulation Corporations

Director General of Inland Earnings v Malaysian Bar

Recently, the Courtroom of Appeal affirmed the determination of the Large Court in relation to solicitor-shopper privilege and the limitations on the Inland Revenue Board’s (IRB) right to audit the consumer accounts of regulation firms. In essence, the Superior Court’s selection is as follows:

(a) Area 142(5)(b) of the Revenue Tax Act 1967 (ITA) could not be utilised by the IRB to get entry to a customer account with a look at of taxing advocates and solicitors. The section does not go past s 126 of the Proof Act 1950 (EA), which provides for solicitor-customer privilege. In other terms, law firms can refuse to give information on a consumer account to IRB as such information is protected by authorized privilege. Having said that, the privilege does not implement to facts or communication designed for an illegal reason or if it is intended to exhibit commission of fraud by the advocate.

(b) The EA is the unique laws governing legal privilege. Though the provision was enacted ahead of s 142(5) of the ITA, it was a precise provision on authorized privilege, and as these, excluded the operation of the common provision of s 142(5) of the ITA. Considering that the EA was undeniably additional exact, unambiguous and particular, s 126 of the EA have to get precedence in excess of s 142(5)(b) of the ITA to the extent of any inconsistency in regard of matters relating to lawful privilege.

(c) Parliament did not intend to use s 142(5)(b) of the ITA to the exclusion of the typical regulation on legal privilege. The words and phrases “notwithstanding the provisions of any other published regulation” in s 142(5)(b) of the ITA do not exclude the operation of typical legislation. Segment 142(5) of the ITA helps make no reference to prevalent law and, for that reason, such an exception ought to not be read through into the statute.

In short, the solicitor-customer privilege below s 126 of the EA is not influenced by the operation of the ITA and the IRB cannot demand legislation firms to provide information and facts on a client’s account until the client waives privilege. In a nutshell, the IRB can not use the ITA as an instrument to fish for facts on the shoppers of regulation companies.