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Using the Data Protection Act to see HMRC Files. By Nick Morgan

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16th Apr 2008
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Nick Morgan used the Data Protection Act to gain access to the files that HMRC kept on him during a recent tax enquiry, in this article he explains how.

Let me start with something safe, something the vast majority of tax professionals reading this will agree on: if a taxpayer is investigated they should have professional help.

Do I really need to explain why? OK, despite what HMRC claim, tax is a complex business and they run adversarial investigations with belligerent inspectors who assume that you are guilty unless you can prove your innocence. Oh, now we are getting a bit controversial! But come on, if the tax inspectors were lovely warm professional people giving everybody equitable treatment there would be no need to pay for a tax advisor!

Now I’m going to get really controversial - and I feel like a vegetarian gatecrasher at a sausage eating festival here - I think taxpayers (particularly sole traders and those running small businesses) should be able to represent themselves in an investigation and be treated well. There, I’ve said it and now I feel so much better.

I’ve spoken to quite a few tax advisors and they have all said the same thing, if the taxpayer turns up at the interview without professional advice, without having requested an agenda and not knowing the difference between an aspect enquiry and a full enquiry the inspector will be pretty sure he’s going to get “a result”. Good professional help will put the HMRC officer on the back foot.

I think this is wrong. I think unrepresented taxpayers should be treated as well as represented taxpayers - if not better. The jargon should be explained, as should such draconian processes as scaling back.

There has been HMRC lip service about reform and the Openness and Early Dialogue initiative is now coming to an end, but like many accountants and tax advisors I don’t hold out much hope for that But never mind - don’t worry - I have found something - just by chance - legislation already in place that can level the playing field. And here’s more good news, this can be used by the unrepresented and professionals alike, it’s called the Data Protection Act.

Parts of the HMRC website are next to useless: "This text has been withheld because of exemptions in the Freedom of Information Act..." But other parts are extremely useful. A search on Google brought me to this page: DP F/S1 Information we hold about you - Data Protection and I could not believe my eyes. It read "If you would like to submit a request for information under the terms of the Data Protection Act please email your request to Gail Taylor.” And it was free too, wow.

As I had then been the subject of a belligerent tax investigation for almost two years the idea of getting to see my HMRC file was a small slice of nirvana.

There was - however - a string of caveats. Under “Is all information always released?” It said, “The law allows us to refuse your request for information.” Ah, here we go, “For example, if you have previously made a similar request and there has been little or no change to the data since we complied with the original request.

The law also allows us to withhold information, for example, where release would be likely to prejudice; the prevention or detection of crime, the apprehension (arrest) or prosecution of offenders, the assessment or collection of any tax or duty or information that may reveal the identity of another person, or information about them.”

Well after reading all that I wasn’t quite so sure what information would be released. But I put in my application - I had nothing to lose - and waited.

My understanding of how HMRC works is this: the whole file is physically sent to Newcastle where it is read and vetted by the Data Protection team. Once they have decided what can and cannot be released copies are made and sent out to the taxpayer and the original documents are then returned to the investigating officer.

What do you get? Well in my case just about everything - the pages were numbered so I could quickly detect any gaps. The information was excruciatingly embarrassing for HMRC with the investigating officer admitting that the case was not a big one and a senior officer saying that he wanted it closed down ASAP.

Six months later I made a second request and six months after that a third. Each request brought a new bundle of paperwork, highlighting the weaknesses in the HMRC case against me. In the last set of documents the name of the officer in the local appeals unit was blacked out with felt-tip but simply holding the paper up to the light was enough to make the name clearly visible.

My case has become both increasingly public and embarrassing for HMRC with a website at www.tax-hell.co.uk and an article published in The Sunday Times earlier this month, [April 2008] ten of the taxman’s sneakiest tactics, which can be read here http://business.timesonline.co.uk/tol/business/money/tax/article3688559.ece.

So my point is this: if HMRC could have blocked this request they would certainly have done so - strangely enough my third request was ‘lost’ and I was told that it would take a further 40 days to process, but then the whole file miraculously arrived the next week.

So how come so few accountants and tax advisors use the Data Protection Act? Your guess is as good as mine. Needless to say HMRC don’t go around publicising the fact that people being investigated can see their confidential notes, records of phone calls and copies of investigator and co-worker emails.

Will it get used? I imagine so, in the Sunday Times article this was the area I got most feedback on. In his Accounting Web article Another Tax Hell? Simon Sweetman said, “The most interesting part of Nick Morgan’s story is how he accessed HMRC’s files…”

Will HMRC now move the goalposts so the information is not so readily available? Yes, I think it’s only a matter of time before this happens, but HMRC is a slow creature and changing legislation takes time. My advice is to use the Data Protection Act while you still can and fight any attempt to change it. Tax investigations may never be the same again.

***

Nick Morgan can be contacted through the website: www.tax-hell.co.uk

For further information and to apply to the Data Protection Unit contact [email protected] or call 0191 225 7575 alternatively write to
HMRC,
Data Protection Subject Access Unit, Room BP5001,
Benton Park View,
Longbenton,
Newcastle upon Tyne,
NE98 1ZZ

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Replies (14)

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By IANTO
24th Jun 2008 14:52

Using the DPA against HMRC
I've successfully used a DPA application to retrieve information about an expenses investigation. During this time, I mounted a case in the ET for employment rights, which of course I lost. What was interesting was the fact that included in the notes was a letter indicating that I should be investigated under IR35. However, the reply in simple terms was "leave well alone" as I had lost at the ET. It was my intention to use the ET result as a shield against IR35, because whichever way the result went, I reasoned, correctly as it transpired, that HMRC would have difficulty in being successful with an IR35 investigation. This also strengthens my belief that HMRC could not ignore a status decision for a particular individual, from the ET.

The other point to make, in my opinion is that the more hassle an inspector gets with an investigation, the more likely it is that the investigation will be dropped. I short circuited HMRC's complaints procedure by lobbying the Parliamentary Ombudsman directly as well as prominent figures in Parliament, namely Dawn Primarolo, who was PMG at the time. Again the message is -don't play their game with their ball on their field with their referee!

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By AnonymousUser
13th May 2008 10:02

Feedback
I have been trying out the DPA powers on that perennial shower, the Tax Credit Office, and I thought I would give all y'all a heads up.

In pursuit of their policy of delay and obfuscation, it seems that a valid form 64-8 is for this purpose inadequate authority. If the application is made by the agent, the Data Protection Unit require separate authority signed by the taxpayer (no specific form for this as far as I can tell) within the last 6 months prior to the application.

Precisely what is the significance of the 6 month deadline is a mystery to me. I cannot find reference to it in the DPA itself. A search of the statutory instruments turns up over 2000 hits, so at that point I gave up. Doubtless I could have refined the search better.

Given that they solicit requests by email, which for all they know could be spoofed by anyone, it seems to be just another beaurocratic smokescreen.

Oh well. Onward and upward.

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By User deleted
21st Apr 2008 11:51

Clint
Additional powers: Yes, but these are if you are suspected of serious organised crime or terrorism.

HMRC is not a person and so it cannot use the DPA to access information held about it. Not that many tax agents would have any information to request!

Nichola Ross Martin
Tax editor, AccountingWEB.co.uk

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By User deleted
22nd Apr 2008 10:02

Self representation
I'd agree with Jane's comment - It's much harder to get a good result when dealing with your self as a client even if you have the relevant skills and experience -it's a bit like spotting your own typographical errors -other people's are always easier to see.

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By mikewhit
21st Apr 2008 11:54

Subject access
@Clint:
But it is the Subjects who have the right to inspect their data, so it would just be your clients who could request information from your practice - not HMRC.

Reciprocity does not come into it.

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By AnonymousUser
21st Apr 2008 09:51

Sauce for the goose?
Like all good law-abiding accountancy practices, ours is registered with the Data Protection Registrar. I wonder whether a habitual request by accountants for the release of information held by HMRC, using the DPA as authority, might result in reciprocal requests by HMRC for information under the same authority held by agents.

I should be interested to know whether there is any information to which HMRC have right of access under this authority that they do not already have under their normal powers contained in TMA.

Anyone with views on this?

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By mikewhit
17th Apr 2008 17:38

Save web form as PDF
@Louise:
If you have installed (e.g.) CutePDF you can use your web browser 'Print' to send the page to a PDF file, which some people might prefer as a record of a page - for one thing it's harder to tamper with once it's created.

But if the HMRC system was up to scratch it should send a 'signed' (digital) receipt and a copy of your message back to your email address.

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By AnonymousUser
17th Apr 2008 17:29

How are you supposed to apply ...
... if you don't have internet access?

There is a "Contact Us" mailing address, for "information on policy and how we comply with the 8 principles of the Data Protection Act". Perhaps it would also serve for the purposes of statutory notices.

PS I have just seen that you give Gail Taylor's full email address at the foot of the leading article. Sorry about the earlier post. Well, not really. How are we supposed to know?

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By User deleted
17th Apr 2008 16:19

Clint - try "Print Screen"
Although I'm sure there are better ways, a simple way to copy an online form submission is to press the "print screen" button then paste into a word document - obviously might need to copy more than once if it's a long form, but at least gives you a record.

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By AnonymousUser
17th Apr 2008 15:01

Email link is Total Ratner
I have already had in force some applications to HMRC for information to be provided under the authority of s.7(1) DPA 1998. Those applications were made in writing to the relevant tax office. I now see from the original post above that I am supposed to apply by email on a web form accessed from the link provided above and repeated below:
http://www.hmrc.gov.uk/leaflets/dp-fs1.htm#5

That link takes you to the web form, here:
http://www.hmrc.gov.uk/asplib/mailer/mailer_form.asp?dpt=GAIL_TAYLOR

In addition to Mike Whittaker's valid concerns expressed in previous responses, a problem with this form is that it does not specify the full smtp email address of the recipient which would enable you to send the request otherwise than via the web form. Why would you want to do that? Because there seems to be no way to copy the email to yourself or otherwise keep any electronic copy of what you have sent, when you have sent it or to whom.

At least, I cannot find a way. Would be helpful if one of you kind folk can put me right on that. As far as I can see, the best that can be achieved is to compose the message in a separate file in Notepad, copy it to the clipboard, paste the clipboard into the web form, and then make a manual note in the Notepad document of the link and date sent. Sheesh!

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By AnonymousUser
17th Apr 2008 09:32

Representation
Nick don't be embarrassed by your comments - of course in an ideal world a taxpayer should be able to handle it him or herself. Ditto if one were to go to a tribunal for any reason, or to go to court.
But the fact is that doing something once is never going to give you the experience and insight that doing something day in day out does. An accountant whose firm regularly handles enquiries will have experience to offer that someone on their own cannot hope to compete with. I would not go to court without using a solicitor even though I have 2 law degrees because I don't have the practical day to day experience which can matter so much in handling a dispute with a government department (or anyone else).
I have referred before on this site to some research I did a couple of years back with regard to tax tribunals. My small sample sadly showed a clear correlation between representation, the quality of representation and success.
So if accountants say get a representative to handle an enquiry, it's not just because they want the work - it's far and away more likely to get you a better outcome.

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By mikewhit
17th Apr 2008 08:40

Bad email address policy
It's bad policy of the HMRC to use personal email addresses for contacting a 'department' - what happens when the estimable Ms. Taylor changes role or job ?

They should have something like [email protected] which gets forwarded to whoever is currently responsible: currently, Gail Taylor.

But someone coming back to this item in a year's time might get a bounced email.

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By neileg
16th Apr 2008 15:46

Times link
The link above has a spurious trailing full stop. This one should work
http://business.timesonline.co.uk/tol/business/money/tax/article3688559.ece

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By mikewhit
16th Apr 2008 13:52

Controlled release
On the subject of controlled releasing of information:
1) if you wish to release printed pages with blanked-out information, always black felt-tip or tippex the required fields and then make a photocopy with contrast setting: lighter+2 (tippex) or darker+2 (black f-t). [or adjust until field is void]
Release the photocopy, of course !!

2) With .DOC document files (MS Office) save as an RTF format file, then rename as .DOC This will prevent any document history or other data being leaked inadvertantly.

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