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An anonymous female | AccountingWEB | Taxpayer secures rare tax tribunal anonymity
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Taxpayer secures rare tax tribunal anonymity

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A taxpayer’s request for anonymity in their tax tribunal on the basis of mental health raises the thorny question of privacy in appeals.

21st Jun 2024
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Most taxpayers would rather their tax affairs weren’t publicly aired for all to scrutinise, but the veil of anonymity is a rare benefit for those that take their case to the tax tribunals. 

However, in a judgement delivered on 17 May, a taxpayer managed to secure anonymity in L vs The Commissioners for His Majesty’s Revenue and Customs.  

The taxpayer maintained that anonymity was required in this instance on the basis of two grounds: there is a serious risk of serious financial harm and a serious risk to health as a result of mental health. 

Judge Amanda Brown KC agreed that in this case, only one of these warranted anonymity. However, this was a rare occurrence as the tax tribunals have a history of trumping “open justice” over anonymity. 

The principle of open justice

There are only a handful of scenarios where a taxpayer would be granted anonymity. Some of these include where national security is considered or to protect the individual’s right to respect their private and family life and to maintain confidentiality of sensitive information. 

But on a whole, as the judge emphasised in this instance: “The principle of open justice is an important one even where holding a public hearing will necessarily involve making private information public.”

In deliberating his decision, the first tier tribunal judge referenced Banerjee v HMRC where it was discussed that “it will only be in truly exceptional circumstances that a taxpayer’s rights to privacy and confidentiality could properly prevail in the balancing exercise that the court has to perform”.

This particular case acknowledged that taxation has always been a subject of “particular sensitivity” and that it is an area where public and private interests “intersect, if not collide”. For that reason, “there is nearly always a wider public interest potentially involved in even the most mundane seeming tax dispute”.

A quote pulled from that case, and referenced in this insurance, summed up the delicate balance needed when it comes to open justice and anonymity: “The inevitable degree of intrusion into the taxpayer’s privacy which this involves is, in all normal circumstances, the price which has to be paid for the resolution of tax disputes through a system of open justice rather than by administrative fiat.”

Refusal of anonymity

Over the years, there have been many high profile examples of where anonymity was not granted. In JK v HMRC, for example, a taxpayer sought to claim anonymity on the grounds of their ADHD and various addictions, fearing that this would damage their reputation - the tribunal in that case disagreed. 

Then there was the famous case of Martin Clunes. The well-known actor attempted to claim anonymity after he underwent cosmetic surgery and sought to set the cost of the treatment against his earnings, arguing that the surgery was for the purpose of his acting trade. However, the question was over whether the expense was incurred wholly and exclusively for his trade. The tribunal ultimately refused Clunes’ request, deciding that the Doc Martin star needed to be identifiable 

More recently, anonymity in tax appeals has become a topic of conversation again in the case of the Commissioners for His Majesty’s Revenue and Customs vs The Taxpayer [2024].  The ‘taxpayer’ was keen to hide their identity in order to avoid any publicity over their tax arrangements.

The decision

When it came to L vs The Commissioners for His Majesty’s Revenue and Customs, the judge granted anonymity because of the serious risk to the taxpayer’s mental health. 

The appellant was previously employed in the financial services sector, but after their employment ended, they entered a settlement agreement taking a sum less than what they might have received in an employment tribunal in order to avoid a public hearing. 

The appellant had a long history of mental health problems. The case noted that their first psychotic episode occurred in 2010 and was followed by a prolonged period of depression and anxiety for over a year. 

Their mental health issues were triggered by workplace stress, and the appellant claimed they experienced discriminatory treatment at their employment.   

The appellant was diagnosed with bipolar disorder years later and the tribunal heard how during points where they are unwell, the risk of suicide is high. Following treatment they were released into the care of her GP.

The judge was swayed in their decision after hearing how the prospect of a public hearing had caused increased anxiety, insomnia and irritable mood, with the appellant’s psychiatrist warning after increasing the medication that the taxpayer is at risk of a relapse under the stress of having the information publicly available. 

It was accepted that the appellant was at serious risk of harm to health and possibly life if their application for anonymity was refused. 

Doubts over anonymity argument for commercial reasons

However, the judge was less convinced about the case for anonymity based on the commercial impact of a public hearing.

“I take the view that, in the context of tax cases where frequently the sums in dispute are significant (either in absolute or relative terms), to allow anonymity on the basis of a fear of commercial consequences based on circumstantial assertion is significantly more challenging.” 

They added: “Were I have needed to do so, and in order to have considered the commercial aspects of this case to have weighed sufficiently strongly against the principle of open justice, I would have wanted more evidence as to the objective reasonableness of the unquestionable subjective fear of the commercial risk before deciding the case on that basis.” 

The case shows the delicate balance in tax tribunals between the pursuit for open justice and the need for privacy in only the exceptional cases. 

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