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Ingenious wins HMRC press briefing appeal

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21st Oct 2016
Freelance journalist
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HMRC broke its duty of confidentiality to taxpayers when it discussed a company’s controversial film investment schemes with journalists, the UK’s Supreme Court has ruled.

Last year, Ingenious Media lost its legal appeal that HMRC had breached its duty of confidentiality and acted unlawfully by discussing the investment company’s controversial film investment schemes with journalists from the Times newspaper.

The Court of Appeal case [C1/2013/3302] focused on a meeting in 2012 between Dave Hartnett, the then permanent secretary for tax at HMRC, and Times journalists.

The meeting, which Hartnett and the journalists agreed was “off the record” was to brief the journalists about tax avoidance. During the meeting, the film schemes of Ingenious and its chief executive Patrick McKenna were also discussed.

The journalists used some of the information in a story for the Times. McKenna and Ingenious took legal action, claiming that HMRC had breached confidentiality.

In 2013, the High Court rejected Ingenious’s claim on the basis it was off the record, and that Hartnett had “proper and lawful reasons” for disclosing the information.

Now, however, the Supreme Court has allowed an appeal by Ingenious.

The court ruled that an “impermissible disclosure of confidential information is no less impermissible because the information is passed on in confidence, or ‘off the record’.”

The information supplied to journalists by the former head of HMRC was confidential in nature, and HMRC owed a duty of confidentiality under the Commissioners for Revenue and Customs Act 2005, the court said.

The desire to foster good relations with the media and to publicise HMRC’s view about tax avoidance schemes, and speculation that the journalists may have subsequently informed Hartnett about other tax avoidance schemes do not provide sufficient justification for the disclosures either, the court said.

Jolyon Maugham, a QC who specialises in tax litigation, told AccountingWEB that the Supreme Court’s ruling may mean that HMRC and possibly other government departments take a more “conservative” view of when providing information to the media or responding to Freedom of Information requests.

Nigel May, tax partner at MHA MacIntyre Hudson, said that he was pleased by the ruling.

“Taxpayer confidentiality is fundamental, and one cannot have the circumstances where HMRC is prepared to use this as a shield from disclosing what they do not want to say whilst being prepared to use it as a sword against individual taxpayers.”

Replies (9)

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By Justin Bryant
21st Oct 2016 11:09

I was impressed with how apologetic and contrite HMRC's response was in the link below, having lost 5-0 in the SC with the leading judgment by a law lord who has written the definitive text book on the law of confidentiality!

https://www.cchdaily.co.uk/success-ingenious-case-against-hmrc?dm_i=B5X,...

What's interesting is his comments indicating that PM's lawyers seem to have not got their pleadings/submissions quite right in the lower courts, but a win's a win as they say.

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By graweb901
24th Oct 2016 10:51

The decision is I think a victory for common sense but one that may have an unintended backlash. It seems obvious that the core principle of HMRC, i.e. taxpayer confidentiality, should prevent names being mentioned in public in connection with any tax situation, especially perhaps alleged avoidance. It seems obvious that Mr Hartnett in his instance went too far.

However, it is legitimate for the media to be used to publicise those "schemes" that HMRC consider to be worthy of challenge if for no other reason than to warn unsuspecting taxpayers away from using them. We are currently dealing with several hundred cases where a more proactive approach from HMRC in this manner would have prevented life changing bills arriving.

We fear that the pendulum will now swing too far away from public briefings and HMRC will be wary of making statements. We may even see HMRC pulling further back from the already devalued "consultation" process.

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Replying to graweb901:
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By rbw
24th Oct 2016 13:17

graweb901 wrote:

We fear that the pendulum will now swing too far away from public briefings and ...

Fair point. But some feel Dave Hartnett didn't so much push the pendulum too far as take it off and use it to beat opposition over the head so arguably necessary ;) And if HMRC cannot make journalists - and Ministers, Parliament etc - aware of what they perceive as abuse without naming names then they need to improve their core skills.

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Replying to rbw:
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By graweb901
24th Oct 2016 17:09

Be hard to disagree with the description.

Unfortunately with something like Ingenious and their plans, a lot of their investors are public figures and their names are available on the public record. The media in whatever format is more likely to print "football star you've heard of is a tax avoider" than "highly complex but legal tax planning is under enquiry". One sells newspapers and one does not.

The really worrying issue is if HMRC close up shop and just publish new law with no warning. The consultation process, limping along as it is, at least gives some warning. If though we get a 20 retrospective law like the proposed 2019 charge on disguised remuneration, with now warning, real harm is going to be done.

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By Mike18
24th Oct 2016 12:09

Nigel May got it right. 'Off the record' was no excuse for a breach of confidentiality. A worrying failure of the High Court of Justice to defend the rights of a taxpayer to privacy, reversed only by the Supreme Court, and why is HMRC briefing newspapers informally?

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By Justin Bryant
24th Oct 2016 13:00

In fairness the SC appear to attribute at least some of the High Court's & CoA's oversight (in getting this wrong) to the pleadings/submissions not being quite right; hence it's not all that worrying and the SC's judgment is clearly correct there.

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By TMR
24th Oct 2016 17:05

Ok but how does this benefit users of this scheme ? Slap on the wrists for HMRC seems no big deal ?

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By TMR
24th Oct 2016 17:05

Ok but how does this benefit users of this scheme ? Slap on the wrists for HMRC seems no big deal ?

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By AndrewV12
14th Nov 2016 14:05

Just idle curiosity is the tax saving scheme still legal, or is the above just a side show.

Typical the Ex head of HMRC, the old its getting hot under the collar, bale out time, on a very nice package of course..

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