The Supreme Court has today ruled that HM Revenue & Customs (HMRC) breached confidence when it hosted an off the record discussion with journalists about a scheme a taxpayer was using.
David Hartnett, then permanent secretary for tax at HMRC, told two journalists from The Times in 2012 that he was not a fan of film tax schemes, such as one being used by Ingenious Media Holdings and its chief executive Patrick McKenna.
It was agreed the meeting was off the record, and Hartnett understood this to mean none of his comments would be published.
The Times later ran an article with quotes from a "senior Revenue official" about the scheme Ingenious and McKenna were using, including that HMRC "would like to recover lots of tax relief he's generated for himself and for other people".
Although two lower courts dismissed Ingenious' complaint that Hartnett's discussion breached the taxman's confidentiality obligations, the Supreme Court allowed the appeal, declaring that the conversation never should have happened, regardless of whether it was on or off the record.
"The fact that Mr Hartnett did not anticipate his comments being reported is in itself no justification for making them," said Lord Toulson in his judgement, with which the other four judges agreed.
Toulson continued: "The whole idea of HMRC officials supplying confidential information about individuals to the media on a non-attributable basis is, or should be, a matter of serious concern."
An Ingenious spokesperson said:
This was never about restricting HMRC's ability to collect taxes, nor was it about preventing the press from investigating public interest stories. Consistent with HMRC’s own guidelines, this was simply about upholding the basic legal principle that HMRC owe a duty of confidentiality to each and every tax payer and their affairs should not form the subject of 'off the record' background briefings to the media.
A HMRC spokesperson said:
HMRC defended this case because it considered that the disclosure made by Mr Hartnett was lawful. However, the Supreme Court has decided otherwise and we will examine the judgement in detail.
Commenting on the case, James Badcock, partner and head of tax and estates at Collyer Bristow, said:
HMRC leaking its intention to aggressively pursue a taxpayer to the press brings unnecessary aggravation to a dispute.
Every taxpayer, whatever HMRC thinks they have done, has a right of confidentiality until the results of a tax dispute become a matter of public record.