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HMRC Confidentiality & Very Private Client

Wealthy Client Sends Tax Enquiry Papers To HMRC-What Happens To Them? How many HMRC Staff See Them?

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I have a very wealthy client who is the subject of an unusual tax enquiry. He is extremely private.

At the outset of the enquiry, before he engaged me, he dutifully sent wads of information to HMRC, namely bank statements, sources of wealth, EIS investment details and their providers, sources of funding for said EIS investments etc. etc.

Due to previous run-ins with HMRC confidentiality, client wants to put pressure on HMRC to explain how they have maintained confidentiality of his tax papers.

Client knows that if he posts response to, say, specialist Mr X at HMRC Bristol, it may be delivered to HMRC address in, say, Wolverhampton. So he is left scratching his head in the knowledge that some low level employee at Wolverhampton must be scanning in his papers there, and then somehow the scanned copies end up with specialist Mr X at HMRC Bristol, or his understudy.

His main gripe is that if a dishonest employee at HMRC passes client's data to the criminal underworld, some crook will get hold of said confidential data and misuse it.

From prior run-ins with HMRC, it seems that HMRC are not that bothered if private and confidential information gets "lost".

But how do I satisfy client that HMRC must have certain procedures in place to ensure that all 56,000 of their employees are not looking at my client's papers. And yes, my client is that paranoid he really feels that all and sundry at HMRC have access to that data.

The problem I have is that I have no idea at all nowadays how HMRC works, and how it manages to keep wealthy client data from prying eyes. One would assume that as soon as client's envelope is signed for at HMRC (that is if HMRC employee can be bothered to sign for it), then it could be handled by several low-level employees of questionable integrity.

 

Replies (57)

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By Tax Dragon
28th Oct 2019 06:52

Careful, Penny. This guy may well end up accusing innocent little you. (Remember the Hooded Claw....)

Why is he leaving his previous accountant?

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Replying to Tax Dragon:
By penelope pitstop
28th Oct 2019 12:40

Thanks, but he has dealt with his own complex tax for years.
He has just recently got out of his depth.

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By Tax Dragon
28th Oct 2019 07:02

And it's not your job to police HMRC or convince your client if the things you say. He is legally obliged to provide the information, and that's the end of the matter as far as you're concerned.

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By bernard michael
28th Oct 2019 10:23

Before you were instructed he sent a load of information to HMRC and now wants it to be specially treated. It's a bit late to start squeaking even if it can be achieved.
Why should his information be treated more confidentially than anyone else's just because he's wealthy?

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By Mr_awol
28th Oct 2019 10:25

I wouldn't get involved too much in trying to placate him. You could explain the concerns to the HMRC officer conducting the enquiry - and hope that between you a way of keeping the client happy can be agreed. Ultimately, however, all you can really do it make sure HMRC are only getting data they are entitled to request. If HMRC are requesting items that are within their powers then those items will need to be provided and your client can either like it or lump it.

In all honesty I'd be surprised if whomever is doing the scanning can really be bothered to leaf through your clients papers - and even if they did, they probably wouldn't understand them anyway.

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Replying to Mr_awol:
By penelope pitstop
28th Oct 2019 12:41

HMRC enquiry started by Officer A.

HMRC enquiry finished by Officer B!

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Replying to penelope pitstop:
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By Mr_awol
28th Oct 2019 19:31

not uncommon for an enquiry to drag on so long that someone else takes it over.

So speak to the current guy if need be. Still doesn’t change the fact that he’s gonna have to stump up the info (as long as it’s correctly requested) anyway, so he may as well stop being so precious about it.

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By SteLacca
28th Oct 2019 10:32

HMRC are still bound by The Official Secrets Act, and internally information is only available on a "need to know" basis (which is sometimes a PITA if you phone up about something).

Of course, there may always be rotten eggs, not just at HMRC, but at his bank(s), financial advisors, doctors etc. Why is he so hung up on HMRC?

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By JoF
28th Oct 2019 10:48

When I worked in corporate banking I looked after a client who was extremely wealthy but his private information was of concern due to also being a criminal lawyer (shouldve seen some of the mugshots in his business offices!).

Absolutely nothing had his personal address on it, instead using an accomodation address.

Is there more to this than just his wealth?

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Replying to JoF:
By penelope pitstop
28th Oct 2019 13:21

No. Were you to speak with him he would give you an hour's lecture on the subject of Privacy & Confidentiality and his prior run-ins with HMRC on this subject.

But he would not mind paying you to sit and listen to his gentle letting off of steam.

I am quite happy with that arrangement!

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By ireallyshouldknowthisbut
28th Oct 2019 10:54

You cant do anything about the past.

But for future delivery, it may help to suggest password protected zip files of the data, then at least it would only be the specialist who can open the file initially.

This gets past your "post room" monkey at least.

in practice I find no-one gives a flying toss about other people's income unless they (a) know them personally (b) they are a celeb.

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Replying to ireallyshouldknowthisbut:
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By Mr_awol
28th Oct 2019 13:45

ireallyshouldknowthisbut wrote:

in practice I find no-one gives a flying toss about other people's income unless they (a) know them personally (b) they are a celeb.

Or they are the audit junior:
Step 1 - look up what the internal accountant/FD earns (was always more than me, which seemed like a burning injustice. What do they do with the other three days in a working week?)
Step 2 - look up what the owners earn. Swear about it.
Step 3 - carry out the actual wages section audit work.

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Replying to Mr_awol:
Hallerud at Easter
By DJKL
28th Oct 2019 13:46

My "favourite" was auditing a Nissan dealership around Glasgow circa 1986/1987, I am being paid peanuts as a trainee, the FC in the dealership gets paid a fortune plus a company car etc, yet I am the one ticking through the bank month by month (and this is a business with a turnover in the millions) because he either cannot or will not reconcille the bank- it took me about three days.

To rub salt in the wound it had the standard software all of the Nissan dealerships then had (We audited all of them in the UK), great for those who sell the cars re the info they can extract re individual car costs/ margins etc (replacing T cards) but fails in the basics re the accounts system where the bank report is not even two column debit/credit reporting (so at least each side can be squared more readily) but is instead a white and green dot matrix printout all entries being in one column with the credits having faint "-" signs in front of them to denote they are actually credits- not good fun and given my eyesight these days likely not something I could now do

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Replying to DJKL:
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By Mr_awol
28th Oct 2019 15:02

I feel your pain in terms of motor dealership audits - even those with half decent internal accountants tended to struggle because the sales staff gave them next to no information. Add to that finance companies netting off advances/settlements/manufacturer contributions, part-exchanges listed at one value on the new car sales invoice and another value (adjusted for over-allowance) on the used car platform, and rebates (profit) on new cars not separated from clawbacks or manufacturer backed promotions. Oh and consignment stock (and relevant creditors) never agreeing with the statements because cars had been swapped around dealerships.

I'll also bet the FC either didn't have a company car on his P11D (normally you could spot these as one of half a dozen used cars that had been moved off demo plan and kept 'in stock' for up to two years) or 'officially' drove the tiniest, cheapest, lowest tax demonstrator on plan - along with about five salesmen all 'driving' the same car!

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Replying to Mr_awol:
Hallerud at Easter
By DJKL
28th Oct 2019 23:52

Sounds about right- I could cope with all of that but when you start out with the bank rec adrift by more than you can ignore (actually not convinced you can ignore an adrift bank rec unless you have ticked it through at least once) then it throws everything else in the audit out- as the dealerships were all 51% subsidiaries (so we in Glasgow sent an audit pack and consolidation schedules for each one to our London office) these were audits where there was no room for missed out dots on an i or an uncrossed t.

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Replying to Mr_awol:
7om
By Tom 7000
30th Oct 2019 11:50

Not just me then.....

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Hallerud at Easter
By DJKL
28th Oct 2019 11:39

"The problem I have is that I have no idea at all nowadays how HMRC works, and how it manages to keep wealthy client data from prying eyes."

Inform your client that his wealth entitles him to no more or no less privacy than every other taxpayer. it needs to keep ALL client data from prying eyes and does that, for better or worse, by having sanctions available to it against its employees and its contractors.

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Replying to DJKL:
By penelope pitstop
28th Oct 2019 12:47

So if private data is released, HMRC employee gets botty smacked/sacked.

A small crumb of comfort for my client.

Thanks.

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Replying to penelope pitstop:
Hallerud at Easter
By DJKL
28th Oct 2019 12:58

Well, there is also jail.

My son writes software, mainly for government entities, I do not know which departments, what software, anything, he is totally tight lipped about it, leaves the house comes home, nothing said, and the reason for this is everything in the role is covered by the OSA.

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Replying to DJKL:
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By Sheepy306
29th Oct 2019 10:45

Oh, just think of all those software programmer anecdotes and jokes you’re missing out on :-)

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Replying to penelope pitstop:
Hallerud at Easter
By DJKL
28th Oct 2019 12:59

Does he have the same paranoia re his say stock brokers, his lawyers, his IFA, his bank?

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Replying to DJKL:
By penelope pitstop
28th Oct 2019 13:23

I will ask him.

I do know that he has accidentally received confidential tax papers from HMRC in relation to an enquiry into another taxpayer whose address was in Liechtenstein. He has kept those papers in his safe and told HMRC numerous times what he has done.

HMRC do not seem to be concerned about these tax papers and have taken no action to retrieve them.

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Replying to penelope pitstop:
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By JoF
28th Oct 2019 15:35

As others have said there are always bad apples in all walks of life.

Ive seen some horror stories over the years not just in my banking career, because try as you will to ensure you employ staff with morals and ethics; train and encourage them to apply such morals and ethics; get them to sign confidentiality documents, the official secrets act etc and make examples of those bad apples (sackings and police involvement etc) you will always get another one who thinks its a jolly jape to publicise info, just dont engage their brains and leave paperwork on public transport or who try to make money from having such information.

Part of the issue these days does appear to stem from the general 'cant be bothered doing my job well' culture, but also from such organisations cutting costs on proper control processes.

Im a firm believer in pushing back to ensure things are done correctly, but it can be pretty exhausting and feel like you are trying to hold back the ever encroaching tide of inefficiency.

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By sculptureofman
28th Oct 2019 16:22

When I worked at HMRC they took this sort of thing pretty seriously - people in my team were sacked for looking at a record they had no involvement in.

At the same time they are pretty lax in terms of posting things to the wrong person, which has happened to me on more than one occasion.

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Replying to sculptureofman:
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By leon0001
31st Oct 2019 10:48

On the other hand, a former colleague overheard a tax inspector and another officer discussing his client's case in a tube train on the way to the appeal hearing.
On arrival, he reported this to the Commissioners.
The Revenue's evidence was rejected before they could speak and the appeal was allowed.

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Replying to sculptureofman:
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By leon0001
31st Oct 2019 17:21

Duplicate post

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By flightdeck
28th Oct 2019 16:45

Data confidentiality is a genuine problem - we don't actually know how companies handle our data in real life. It helps if they have formal accreditation such as ISO 27001 but I've no idea if HMRC does (it should).

When submitting info to HMRC, are you allowed to restrict certain elements e.g. can you cover up account numbers and sort codes, blank out out the last 5 transactions etc? Anything you can do to pepper pot personal data makes it a bit harder for data thieves to do anything useful with your data.

Sounds like his worrying extends beyond 'anyone' in HMRC having a read of his info out of idle curiosity and into information security given the fact he has been erroneously given someone else's information - which is terrible!

We're all giving up info left right and center and hoping for the best. It's just how the world works now. He has to deal with HMRC whether he likes it or not so he's just going to have to suck it up. I do have a lot of empathy for him though.

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By Roland195
28th Oct 2019 18:49

I'm another that thinks he may have a point. While being wealthy does not entitle to him to special treatment, it does make him a more attractive target. It is unfortunate that much of the documentation HMRC will require to see will also contain most of the necessary information to make a decent attempt at hacking his accounts/identity theft.

HMG would advise to secure this data safely and not disclose to third parties but he obviously cannot refuse to cooperate but I don't doubt that at least some HMRC employees are working under false pretences for exactly this purpose - if they photograph documents on their private phones, who is to know?

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Replying to Roland195:
By penelope pitstop
29th Oct 2019 00:53

Think you have hit the nail on the head.

This enquiry has compelled client to submit an awful lot of information about his wealth, source and location of wealth etc. In the wrong hands, it could prove most detrimental to client.

The fact is, client has been sending bundles of private information to a certain person at a certain address at HMRC under Royal Mail Signed For, and then it is being re-routed by Royal Mail to goodness knows where.

I can understand why client is a little concerned. He does read the newspapers and watch the news on TV!

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By whitevanman
28th Oct 2019 22:02

Perhaps your very wealthy, extremely private (?) client could employ someone (after vetting, tagging, blindfolding etc) who could shuttle the papers back and forth to the HMRC enquiry officer, each time they are required. That way, none of the dishonest, low level, employees of questionable integrity, will have the opportunity of seeing them (and will sadly have to remain blissfully ignorant of his EIS investments).
Just a thought.

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By Vallery Lee
30th Oct 2019 10:27

I have often wondered this myself and look forward to reading the answers

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By Homeworker
30th Oct 2019 10:42

I thought most high wealth individuals were now dealt with by a special unit, presumably to maintain confidentiality? I have certainly dealt with a couple in this situation. PD1 of course deal with armed forces etc and cannot be contacted on the general helplines or by post other than direct to them.

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Replying to Homeworker:
7om
By Tom 7000
30th Oct 2019 11:56

Yeah they are but maybe he's not that wealthy ;) its all relative

We are all wealthy compare to the average salary in India

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Replying to Homeworker:
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By CptCave
30th Oct 2019 13:41

There is a high wealth management team at HMRC. A few years ago I was given contact details with HMRC officers who were appointed to look after whichever client. Could this be the case with OP?

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Replying to CptCave:
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By leon0001
31st Oct 2019 17:22

I rang up the wealthy taxpayer unit in Bradford.
It seems that to qualify for the services of a proper tax office, you have to be worth at least £10 million (or have been fined for deliberate failure to submit correct returns).
Everyone else seems to get the standard pleb's service.
Oh yes, are judges still prohibited from online filing because of security concerns?

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By Kevinb69
30th Oct 2019 13:26

I agree with the general opinion on here that you are really on a hiding to nothing. HMRC have the legal powers to demand the information and you have nothing in your armoury to control this.

However, that does not mean you should not take HMRC to task on the issue. I have complained on at least three occasions to HMRC's Data Protection Officer when I have received correspondence for unknown third parties.

It may be small comfort but why not ask the officer dealing with the enquiry for a direct address (or use fax) to send the information on a one to one basis and make it clear that all documents are to be kept secure and to be returned to your client on completion. At least if something did occur which led your client to believe his information had been leaked by HMRC they may have a case to answer.

It is interesting as I too have an HNW individual who is a Chinese national, living in the UK. Her concerns surround the Chinese Government finding out about her affairs as, in her words, they do not play by the same rules, and leaks do find there way through.

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By bernard michael
30th Oct 2019 13:47

The problem that the OP has is that the client has already supplied the information and he is trying to close the stable door

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By rbusfield
30th Oct 2019 15:04

HMRC inspectors can access taxpayer's UK bank details through the Connect super computer and will get most international bank account details through the CRS. FYI, following GDPR, this is HMRC's privacy policy. (Rebecca Busfield, Watt Busfield Tax Investigations LLP) https://www.gov.uk/government/publications/data-protection-act-dpa-infor...

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By billgilcom
30th Oct 2019 20:02

Ok present systems within HMRC result in correspondence and information/ documents ending up - even if addressed direct - ending up in a post room somewhere and then being scanned to the relevant officer. And just to add to the clients paranoia yes HMRC on occasions can issue private and personal information to the wrong person.
Of course you could always ensure that HMRC are only requesting information that is reasonably required and not like the client just give them whatever they ask for as he seems to have done in the past.
Equally of course you could also insist that documents and information are handed over at a meeting - but then of course you have to be able to manage the meeting and not let HMRC dictate.
I know this is probably not something that you want to hear but are you sure that their requests are properly as a result of risks identified at the outset or are they on the proverbial fishing trip. Depends a lot on the type of enquiry and what formal enquiry notices were issued at the outset AND of course if the client knows of anything being wrong whether carelessly or deliberately OR if he is innocent and they’re fishing - especially when they seem to be questioning sources of capital etc. What case have they given for this approach. Of course the client may have realised he’s already sold the biscuit and is trying to put impediments in the way of subsequent enquiry.

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By Anthony G Thorne
30th Oct 2019 20:50

Disclosure would be contrary S18(1) Commissioners of Revenue & Customs Act 2005 and as such a criminal act.

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By Anthony G Thorne
30th Oct 2019 20:50

Disclosure would be contrary S18(1) Commissioners of Revenue & Customs Act 2005 and as such a criminal act.

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By Anthony G Thorne
30th Oct 2019 20:50

Disclosure would be contrary S18(1) Commissioners of Revenue & Customs Act 2005 and as such a criminal act.

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By Anthony G Thorne
30th Oct 2019 20:50

Disclosure would be contrary S18(1) Commissioners of Revenue & Customs Act 2005 and as such a criminal act.

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Replying to Anthony G Thorne:
By penelope pitstop
31st Oct 2019 03:04

Almost certainly the most common infraction of this Act will be "Pillow Talk" rendering one of the spouses/partners liable to criminal proceedings.

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By leon0001
31st Oct 2019 10:40

If he received someone else's documents from an HMRC office, why not report it to the Information Commissioner's Office as a GDPR breach?

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By whitevanman
03rd Nov 2019 17:38

As seems to happen too often on Aweb, there have been 45 posts on this and many have not actually addressed the questions posed. Rather they have gone off at a tangent, speculating about some other problem, for which there is no evidence whatsoever. I would be willing to bet that the OP is no wiser and no more able to placate the client. Still, we have managed to vent a few spleens.

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Replying to whitevanman:
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By Tax Dragon
03rd Nov 2019 20:40

Make that 46.

Erm, 47.

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Replying to Tax Dragon:
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By whitevanman
03rd Nov 2019 20:55

Irony is lost on me (48?).

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Replying to whitevanman:
By penelope pitstop
14th Nov 2019 20:33

-ditto- below

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Replying to whitevanman:
By penelope pitstop
03rd Nov 2019 22:14

I think if you answer my original question correctly then you may end up in jail.

Anthony G Thorne's (four identical) responses of 30 October 2019 provide a useful pointer. He refers to disclosure under S18(1) Commissioners of Revenue & Customs Act 2005 being a criminal act.

I am not quite sure if Mr Thorne means 1) disclosure by an HMRC officer of confidential tax information they are aware of, or 2) answering my original question by someone in the know at HMRC (or ex-HMRC) who knows exactly how many HMRC employees have access to a single piece of information, particularly very confidential information.

S18(1) Commissioners of Revenue & Customs Act 2005 says:

Revenue and Customs officials may not disclose information which is held by the Revenue and Customs in connection with a function of the Revenue and Customs.

The word "function" has an extremely wide meaning, probably catching everything an HMRC employee does during work time and after.

"Function" can mean "activity, business, capacity, charge, concern, duty, employment, exercise, job, mission, occupation, office, operation, part, post, province, purpose, raison d'etre, responsibility, role, situation and task".

So, disclosure would include any information held or known about any taxpayer of whatever type.

To my mind, and I stand to be corrected, disclosure would also apply to anyone DISCLOSING WHAT HAPPENS TO TAX PAPERS RECEIVED BY HMRC AS WELL AS DISCLOSING HOW MANY HMRC EMPLOYEES SEE THOSE TAX PAPERS.

If my conclusion is correct, we will never know the answer to my original posting.

It's a bit like the Great Train Robbery of 1963. The robbery was carefully planned based on inside information from someone known as "The Ulsterman". In this famous crime, inside information caused a tremendous amount of damage.

It serves HMRC best if we are left in ignorance as to how HMRC deal with post coming in. In that respect, I conclude that we will never be any wiser on this subject. What we do have is the statutory comfort that an officer of HMRC must never disclose any information in connection with a FUNCTION of HMRC.

I will relate this all to my client. Hopefully, he should now be able to sleep comfortably and safely at night with the full knowledge that details of his full name, full home address, telephone number, date of birth, national insurance number, UTR number and full financial wealth details MUST NOT be disclosed by anyone at HMRC.

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