The Supreme Court: confidentiality matters

The Supreme Court delivered an outstanding judgement on 19 October in R (on the application of Ingenious Media Holdings plc and another) v Commissioners for HM Revenue & Customs.

The case related to an interview given on 14 June 2012 by the Permanent Secretary for Tax in HMRC, Mr David Hartnett, to two financial journalists from The Times. They had requested the meeting to discuss tax avoidance. The meeting was recorded and was agreed to be “off the record”. Following the subsequent article in The Times, a claim was brought against HMRC by Ingenious Media and its founder and chief executive, Mr Patrick McKenna.

It’s worth noting that, in its defence against this claim, HMRC was represented in the Supreme Court by James Eadie QC, whose role as First Treasury Counsel (or “Treasury Devil”) includes defending the Government in significant litigation. Just this week he has been busy defending the royal prerogative against claims that Parliament should be consulted before Article 50 of the EU Treaty is triggered.

In upholding the claim for breach of confidentiality, the Supreme Court stood back from the issues as presented, and from the views taken by the lower courts (which found for HMRC). It took a broad view, encompassing common law principles, in interpreting the statute codifying HMRC’s duty of confidentiality (s.18 CRCA). And it cut to the chase in expressing its unanimous view.

In doing so it confirmed the strict view of taxpayer confidentiality that tax inspectors have always assumed they have to observe. It confirmed that the exceptions to the principle of taxpayer confidentiality are narrowly drawn – again as every tax inspector has generally assumed.

The judgement also confirmed the view expressed to Parliament by HMRC itself on 19 October 2011 – only 8 months before the Times interview – in a letter to the Public Accounts Committee (PAC) sent by Mr Hartnett, and approved by none other than James Eadie QC.

So why did HMRC defend the case? Why did it argue that “fostering good relations” with the media was a reason to give taxpayer information to a journalist (when clearly it had not considered improving relations with Parliament to be a justification)? I will not speculate on the answers as I assume the PAC may wish to explore these matters when senior officials next appear before them.

HMRC’s spokesperson has expressed disappointment at the judgement. I suspect many tax professionals are also disappointed – but not at the Supreme Court’s verdict.


2 thoughts on “The Supreme Court: confidentiality matters

  1. Very true. It’s that ingrained belief which lies behind many people’s unwillingness to provide taxpayer information to bodies like the PAC, or via Press Release.
    But this judgement is even more interesting if you read Privacy International. It makes you wonder if there is any consistent application by HMRC of rules on confidentiality.
    This involved HMRC refusing to disclose anything at all about a Case. The judge commented
    Para 60
    “The irony of the Ingenious Holdings case as applied in the present case is that in that case the HMRC was arguing for a broad power to disclose information based upon a relatively loose nexus between the information disclosed and the functions of the HMRC and in circumstances where they could be indiscrete and in fact disparaging about both a company (Ingenious Holdings) and an individual who promoted tax avoidance schemes. In the present case however HMRC has moved to the absolute other end of the spectrum and in the Decision letter and in subsequent correspondence denied that it has any power at all to disclose information and has adopted a narrow approach towards disclosure which ostensibly contradicts its own arguments in Ingenious Media.”


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