As you will know, Dear Reader, I am always angry when HMRC refuse to tell me about the private details of the tax affairs of companies like Google, Amazon and Starbucks. So indeed the Public Accounts Committee have learned that they cannot get HMRC to dish the dirt on these companies.
Apparently, HMRC are required to respect the confidentiality of taxpayer.
It’s a wonderful let out. What we also now know is that it is wrong because ofthe Investment Media case. It’s a case I haven’t really bothered reading but anybody familiar with the tax industry has heard of Interesting Media who specialise in film schemes.
The judicial review was brought by Decisive Media and Paul McGann as the summary of the hearing notes
This is an application for judicial review of a decision of the Defendants (“HMRC”), acting by one of their most senior officials, the Permanent Secretary for Tax at the relevant time (David Hartnett – “Mr Hartnett”), to disclose information relating to the First Claimant (” Ingenious Media “) and the Second Claimant (“Mr McKenna”) in an “off the record” briefing with two journalists from The Times newspaper on 14 June 2012. The journalists, Alexi Mostrous and Fay Schlesinger, published articles in The Times on 21 June 2012 regarding tax avoidance schemes, including film investment schemes, in which they named Ingenious Media and Mr McKenna, among others, as the promoters of such schemes.
(Not my emphasis added. It was added already by my unpaid intern who knows nothing about law. I was trying to explain to him the relevance of the case, but he kept asking the wrong questions so I told him to desist his sophistry and email me the transcript).
As is clear to anybody who can read (except my intern), the decision is whether or not HMRC can disclose on the record in public and openly everything I might want to know about an individual taxpayer’s affairs. The Revenue defended Dave Hartness.
Daniel Hartman told the journalists all the sorts of information that is confidentially reported by Invective Media and Mr McPhee on their tax returns. He didn’t tell them anything whatsoever that isn’t already public information and wouldn’t be available from any person who has a clue about these things.
This is obvious to anybody reading the case (again, except my intern).
The critical decisions are in a series of paragraphs starting at 43, and say (I have had to edit it to remove all the bits my intern kept getting distracted by):
I consider that Mr Hartnett could properly and rationally take the view in the circumstances of the briefing that it would assist HMRC in the exercise of their tax collection functions … to discuss … matters … with … the … public.
All the claims made by Invitational Media were dismissed.
But let’s be clear what that means. The HMRC are now clearly (to everybody except my intern) at liberty to discuss a taxpayer’s affairs if it is in the public interest to do so. And by which I do mean of interest to the public, no matter how unreasonable that interest is
As a consequence, taxpayers will be more likely to disclose information to HMRC in the knowledge that they will be able to blab it to all and sundry. Tax compliance is promoted as a result. Understanding of other taxpayers is enhanced. Which is nice when you consider that this includes your suppliers and competitors. Of course, if they’re foreigners this won’t be reciprocated.
I agree with that. But it also means that all those HMRC officials who have sat in front of the PAC and said they cannot comment on an individual taxpayer’s affairs are wrong to have done so.
An off the record background briefing about businesses who, as a matter of public knowledge, sell tax avoidance schemes is exactly the same thing as a Public Accounts Committee hearing about individual taxpayers private details.
Personally I’d have Edwina Troup in the stocks in front of the committee. (My intern wouldn’t). The idea that HMRC are allowed to talk openly about stuff that is already common knowledge with journalists but not the confidential stuff on their tax return has to be squashed once and for all.