InR (on the application of Ingenious Media Holdings and another) v HMRC[2016] UKSC 54 (19 October 2016), the Supreme Court found that HMRC had breached its duty of confidentiality when discussing film partnerships with the press and that such a breach could not be justified.
Mr McKenna, a former senior partner of a global firm of chartered accountants, had devised film investment schemes involving film production partnerships. On 14 June 2012, the permanent secretary for tax in HMRC, David Hartnett, had given an interview about tax avoidance to two financial journalists from The Times. On 21 June 2012, The Times had published two articles, one of which read: ‘Mr McKenna … and [X] are the two main providers of film investments schemes in the UK … Mr McKenna, 56, founder of Ingenious Media, is also involved in a long-running Revenue inquiry into three of his partnerships.’
The reasons given by Mr Hartnett for the disclosures were that it was generally in HMRC’s interests to try to establish good relations with the financial press; that they provided a way of emphasising to the general public HMRC’s views on elaborate tax avoidance schemes; and that Mr Hartnett thought that the journalists might have information of significant value to HMRC, which they might reveal as the dialogue continued. Mr Hartnett also emphasised that the interview had been agreed to be off the record.
Under the Commissioners for Revenue and Customs Act 2005 s 18(1), HMRC may not disclose information it holds in connection with its function.
Ingenious Media had brought a claim for judicial review of the disclosures.
Both the High Court and the Court of Appeal had found that the disclosures had not been in connection with a function of HMRC; and that they had been made for the purpose of a function of HMRC, so that s 18(1) did not apply by virtue of s 18(2)(a)(i). The Supreme Court considered, however, that in passing the 2005 Act, parliament could not be supposed to have envisaged that by s 18(2)(a)(i) ‘it was authorising HMRC officials to discuss its views of individual taxpayers in off the record discussions, whenever officials thought that this would be expedient for some collateral purpose connected with its functions, such as developing HMRC’s relations with the press’.
The Supreme Court added that the fact that the interview had been agreed to be ‘off the record’ did not change the position. ‘An impermissible disclosure of confidential information was no less impermissible just because the information was passed on in confidence; every schoolchild knew that.’
Why it matters: Reversing the decisions of the lower courts, the Supreme Court found that HMRC’s breach of its duty of confidentiality could not be justified by its stated goal of fostering good relationships with the financial press. The Commissioners for Revenue and Customs Act 2005 s 18(2)(a)(i) could not be read as giving HMRC a discretion so wide that it would ‘emasculate’ its duty of confidentiality.
InR (on the application of Ingenious Media Holdings and another) v HMRC[2016] UKSC 54 (19 October 2016), the Supreme Court found that HMRC had breached its duty of confidentiality when discussing film partnerships with the press and that such a breach could not be justified.
Mr McKenna, a former senior partner of a global firm of chartered accountants, had devised film investment schemes involving film production partnerships. On 14 June 2012, the permanent secretary for tax in HMRC, David Hartnett, had given an interview about tax avoidance to two financial journalists from The Times. On 21 June 2012, The Times had published two articles, one of which read: ‘Mr McKenna … and [X] are the two main providers of film investments schemes in the UK … Mr McKenna, 56, founder of Ingenious Media, is also involved in a long-running Revenue inquiry into three of his partnerships.’
The reasons given by Mr Hartnett for the disclosures were that it was generally in HMRC’s interests to try to establish good relations with the financial press; that they provided a way of emphasising to the general public HMRC’s views on elaborate tax avoidance schemes; and that Mr Hartnett thought that the journalists might have information of significant value to HMRC, which they might reveal as the dialogue continued. Mr Hartnett also emphasised that the interview had been agreed to be off the record.
Under the Commissioners for Revenue and Customs Act 2005 s 18(1), HMRC may not disclose information it holds in connection with its function.
Ingenious Media had brought a claim for judicial review of the disclosures.
Both the High Court and the Court of Appeal had found that the disclosures had not been in connection with a function of HMRC; and that they had been made for the purpose of a function of HMRC, so that s 18(1) did not apply by virtue of s 18(2)(a)(i). The Supreme Court considered, however, that in passing the 2005 Act, parliament could not be supposed to have envisaged that by s 18(2)(a)(i) ‘it was authorising HMRC officials to discuss its views of individual taxpayers in off the record discussions, whenever officials thought that this would be expedient for some collateral purpose connected with its functions, such as developing HMRC’s relations with the press’.
The Supreme Court added that the fact that the interview had been agreed to be ‘off the record’ did not change the position. ‘An impermissible disclosure of confidential information was no less impermissible just because the information was passed on in confidence; every schoolchild knew that.’
Why it matters: Reversing the decisions of the lower courts, the Supreme Court found that HMRC’s breach of its duty of confidentiality could not be justified by its stated goal of fostering good relationships with the financial press. The Commissioners for Revenue and Customs Act 2005 s 18(2)(a)(i) could not be read as giving HMRC a discretion so wide that it would ‘emasculate’ its duty of confidentiality.
