R (on the Application of Ingenious Media Holdings plc and Another) v. Commissioners for Her Majesty’s Revenue and Customs

United Kingdom

19.10.2016

Civil

Impermissible disclosure of confidential information is no less impermissible because information is passed on in confidence, or “off the record”

Claim by Ingenious Media and Mr McKenna was brought by way of an application for judicial review, it was a straightforward claim for breach of a duty of confidentiality. Mr Patrick McKenna is a former senior partner of a global firm of chartered accountants. He is the founder and chief executive officer of Ingenious Media Holdings plc. Company and its subsidiaries (collectively “Ingenious Media”) are an investment and advisory group specialising in the media and entertainment industries. Among other things they have promoted film investment schemes involving film production partnerships. On 14 June 2012, Permanent Secretary for Tax in HMRC, Mr David Hartnett, gave an interview to two financial journalists from The Times. They had requested the meeting to discuss tax avoidance. Meeting was recorded and was agreed to be “off the record”. On 21 June 2012, The Times published two articles on subject of film schemes and tax avoidance. Mr McKenna and Ingenious Media brought a claim for judicial review of decision of HMRC, acting by way of Mr Hartnett, to disclose information which concerned them to The Times journalists. Court held that it should not approach the disclosures as if it were primary decision maker. Further, disclosures made by Mr Hartnett were not irrational, were made for a legitimate purpose and were proportional.

Duty of confidentiality owed by HMRC to individual taxpayers is not something which sprang fresh from mind of the legislative drafter. It is a well established principle of law of confidentiality that where information of a personal or confidential nature is obtained or received in the exercise of a legal power or in furtherance of a public duty, recipient will in general owe a duty to the person from whom it was received or to whom it relates not to use it for other purposes.

Section 18(1) of Commissioners for Revenue and Customs Act, 2005, to be intended to reflect the ordinary principle of taxpayer confidentiality, to which Section 18(2)(a)(i) creates an exception by permitting disclosure to the extent reasonably necessary for HMRC to fulfill its primary function. Parliament intended section 18 to prohibit disclosure of information of most ordinary kind about which there could be no possible confidentiality. Moreover, even if Section 18(1) has wide scope suggested by HMRC, it does not follow that Parliament must be taken to have intended by subsection (2)(a)(i) to confer on officials a wide ranging discretion to disclose confidential information about the affairs of individual taxpayers.

Ordinarily it is a matter for Court to decide question whether there has been a breach of a duty of confidentiality, applying established principles of law to its own judgment of the facts. Public bodies are not immune from the ordinary application of the common law, including in this case the law of confidentiality. Common law is multi-faceted and remains the bedrock of the English legal system. An impermissible disclosure of confidential information is no less impermissible because the information is passed on in confidence, or “off the record.

Information supplied by Mr Hartnett to journalists about Mr McKenna and Ingenious Media was information of a confidential nature, in respect of which HMRC owed a duty of confidentiality to them under section 18(1). It was limited in scope, but it was not insignificant, as is evident from the use made of it in the articles which followed the interview. As to justifications put forward by HMRC, a general desire to foster good relations with media or to publicise HMRC’s views about elaborate tax avoidance schemes cannot possibly justify a senior or any other official of HMRC discussing the affairs of individual tax payers with journalists.

Fact that Mr Hartnett did not anticipate his comments being reported is in itself no justification for making them. Whole idea of HMRC officials supplying confidential information about individuals to media on a non-attributable basis is, or should be, a matter of serious concern. Disclosures by Mr Hartnett were not therefore justified under Section18 (2)(a) of the 2005 Act.

Tags : Information Disclosure Permissibility

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