XYZ v HM Revenue & Customs & Anor

Information obtained through international criminal mutual assistance may be used in civil proceedings where the governing statutory restriction is properly construed as limited to criminal investigations and proceedings. A court exercising its disclosure discretion must nevertheless give substantial weight to the concerns of the foreign authority that supplied the material. Disclosure to a liquidator may fall within consent given for use by a tax authority where the liquidator acts exclusively as its nominee, but safeguards should restrict use to relevant material and the authorised tax-recovery purpose.

The liquidator of ABC Limited applied under section 236 of the Insolvency Act 1986 for HMRC to disclose material obtained from Dutch prosecution authorities under an international Letter of Request. ABC had been involved in a major VAT fraud, HMRC was its only creditor, and the liquidation was being conducted for HMRC’s benefit.

The Dutch authorities had consented to specified civil uses by HMRC but expressed concern about disclosure to the liquidator. The central issues were whether section 9(2) of the Crime (International Co-operation) Act 2003 permitted civil use and whether disclosure should be ordered in light of the Dutch authorities’ objections.

1. Disclosure ordered. The applicant’s undertaking restricted use of the documents to collecting HMRC’s tax debts and to relevant data. HMRC was ordered to provide copies, subject to the possibility of reconsideration if the Dutch Minister of Justice requested it within 28 days.
2. Section 9(2) of the Crime (International Co-operation) Act 2003 did not prevent the court from exercising its discretion under section 236 of the Insolvency Act 1986 in favour of disclosure for civil purposes. The deputy judge considered himself bound by BOC Limited v Instrument Technology Limited [2002] Q.B. 537, which treated the equivalent restriction in the 1990 Act as implicitly confined to criminal investigations and proceedings.
3. The court recognised the force of the Secretary of State’s submission that international cooperation could be undermined if supplied material were used beyond the foreign authority’s understanding of the request. Foreign authorities’ views and any difficulties under their domestic law were therefore important considerations in the section 236 discretion.
4. Where HMRC was the sole creditor and the liquidator acted exclusively on its behalf, the liquidator could properly be treated as HMRC’s nominee for this purpose. The material could therefore be disclosed, provided that its use was confined to the authorised tax-recovery purpose and to data necessary for that purpose.
5. The court expressed doubts about the correctness of BOC Limited v Instrument Technology Limited and considered appellate reconsideration desirable, but did not determine that issue. The matter was resolved in effect by agreement and the protective undertaking.

First-instance decision. No prior appellate decision in this matter is stated.