An accountant, auditor or tax adviser who belongs to a qualifying professional body does not commit the failure to report offence if the information behind their suspicion came to them in privileged circumstances, meaning while giving legal advice, including tax advice, or in connection with actual or contemplated legal proceedings. The exemption is narrow: it never covers information given to further a crime, it does not apply to routine compliance work, and it gives no defence to the principal money laundering offences.

What does the exemption actually say?

Section 330 of the Proceeds of Crime Act 2002 makes it an offence for a person in the regulated sector who knows or suspects, or has reasonable grounds to know or suspect, that another person is engaged in money laundering not to report it to their nominated officer or the National Crime Agency as soon as practicable. The offence and when it arises are covered in suspicious activity reports for accountants.

Section 330(6)(b) removes the offence where the person is a professional legal adviser or a relevant professional adviser and either the information or other matter that gave rise to the suspicion came to them in privileged circumstances, or they know the identity of the launderer or the whereabouts of the property only because of information that came to them in privileged circumstances.

Section 330(10) defines privileged circumstances. Information comes to the adviser in privileged circumstances if it is communicated or given:

  1. by a client, or a client’s representative, in connection with the adviser giving legal advice to the client;
  2. by a person, or their representative, seeking legal advice from the adviser; or
  3. by any person in connection with legal proceedings or contemplated legal proceedings.

Section 330(11) then removes the protection entirely for information communicated or given with the intention of furthering a criminal purpose. The Terrorism Act 2000 contains a matching exemption in section 21A for the terrorist financing reporting offence.

Who counts as a relevant professional adviser?

Section 330(14) defines a relevant professional adviser as an accountant, auditor or tax adviser who is a member of a professional body established for accountants, auditors or tax advisers that both tests the competence of applicants as a condition of membership and imposes and maintains professional and ethical standards, with sanctions for breaches. The legislation does not list the bodies, so a practitioner who is not a member of such a body cannot rely on the exemption, however good their advice.

Staff are covered through section 330(7B). An employee or partner who assists or supports a relevant professional adviser does not commit the offence if the information came to them in connection with that support and came to the adviser in privileged circumstances. A junior who sits in on a tax advice meeting is therefore in the same position as the partner giving the advice.

Which kinds of work can be privileged?

ICAEW’s guidance on the exemption explains that accountants do not generally give legal advice, but there are times when they do, and that taxation advice is probably the most common example. It also describes the litigation limb as covering confidential communications made for the dominant purpose of actual, pending or contemplated litigation, and stresses that contemplated litigation means a real likelihood, not a mere possibility. ICAEW’s examples of work that may be in privileged circumstances include:

  • advising a client on their tax position, including the options for disclosing undeclared income to HMRC;
  • representing a client at a tax tribunal;
  • acting as an expert witness on instructions from a solicitor in litigation.

By contrast, ICAEW gives the example of a member of staff who comes across a suspicious bank statement while preparing a client’s tax return. That information was obtained in compliance work, not in giving legal advice, so a report must be made. On the same reasoning, bookkeeping, accounts preparation and audit work will rarely qualify, because the information arrives through the engagement itself rather than through a request for legal advice.

Many engagements mix the two. A firm that prepares a client’s accounts and also advises on a tax dispute may learn the same fact through both routes, and only the advice route attracts the exemption. That is why the provenance of each piece of information needs to be recorded.

When does the crime or fraud exception remove the protection?

Information is not privileged if it is communicated with the intention of furthering a criminal purpose (section 330(11)). ICAEW gives the example of someone who provides information in the course of a divorce with the intention of acquiring criminal property; the exception applies and a report is needed. A client who genuinely seeks advice about putting right past tax irregularities is not within the exception merely because the advice concerns an offence. ICAEW’s view is that the advice remains privileged even if the client then decides not to follow it. Later conduct is a different question: information that reaches the firm outside the advice, for example through compliance work, is judged on its own facts.

Is this the same as legal professional privilege?

No. ICAEW states plainly that, unlike lawyers, chartered accountants do not qualify for privilege; what they have is a limited exemption from reporting. Several consequences follow:

  • It only covers section 330. The principal offences of concealing, arranging and acquiring criminal property in sections 327 to 329 contain no privilege defence. If the work the client wants would itself involve the firm in one of those offences, the exemption does not help; see the principal money laundering offences.
  • Prejudicing an investigation. The defence in section 342(3)(c) for disclosures in connection with legal advice is limited to professional legal advisers.
  • Tipping off. Section 333D(2) does extend to relevant professional advisers: a disclosure to the adviser’s own client for the purpose of dissuading the client from engaging in criminal conduct is not tipping off. See tipping off.
  • HMRC information powers. A separate protection applies under paragraph 25 of Schedule 36 to the Finance Act 2008: an information notice does not require a tax adviser to provide information about, or produce their own documents consisting of, relevant communications with the client about the client’s tax affairs, subject to paragraph 26. See Schedule 36 information notices.

Should the firm report anyway, just to be safe?

ICAEW’s guidance says the exemption must be applied where it is available: if the information came in privileged circumstances, it should not be reported; if it did not, it must be. Reporting privileged information is not a neutral act. Consulting the MLRO does not undermine the exemption, because section 330(9A) provides that a disclosure to a nominated officer made by a legal or relevant professional adviser for the purpose of obtaining advice about whether to report, and not intended as a report, is not to be taken as a disclosure to a nominated officer. The MLRO can therefore be asked for a view without the exemption being lost.

Because the analysis is legal and fact sensitive, ICAEW recommends taking legal advice except in the most straightforward cases. Section 330(8) also requires the court to consider whether the person followed relevant guidance approved by HM Treasury; the CCAB anti money laundering guidance for the accountancy sector, which ICAEW and the Chartered Institute of Taxation point members to, deals with the exemption in its reporting section and in supplementary guidance for tax practitioners.

How should the decision be recorded?

ICAEW describes it as vital to identify and record the provenance of all suspicions. A good file note records who provided the information, when, in what capacity the firm was acting, what advice was sought, and why the firm concluded the crime or fraud exception did not apply. Supervisors will ask: HMRC’s Economic Crime Supervision Handbook (ECSH33600) tells its caseworkers not to challenge a privilege reason given for not submitting a SAR, but to ask about and record the specific circumstances in which the accountancy service provider believes privilege applies.

How might this play out?

Illustration only. A prospective client asks a chartered tax adviser for a meeting. She explains that she has held an overseas account for years without declaring the interest, and asks what her options are. The adviser explains the disclosure routes and recommends that she disclose to HMRC.

  1. The information was given by a person seeking legal advice, so it came in privileged circumstances under section 330(10)(b), and no report is made.
  2. The adviser records the meeting, the advice given and the reasons for concluding the exemption applies, and discusses it with the MLRO under section 330(9A).
  3. Six months later the same woman engages the firm to prepare her tax return and asks it to omit the account. That request comes through compliance work and shows an intention to evade tax. The firm must not act on the instruction, must consider whether it can continue to act in line with PCRT, and its MLRO must consider a report.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.