Ingenious Media Holdings Plc & Anor, R (on the application of) v HM Revenue & Customs

Section 18 of the Commissioners for Revenue and Customs Act 2005 has a broad scope. A factually correct disclosure, not involving a taxpayer’s private affairs, may be connected with HMRC’s functions where it supports general revenue collection or reduces ineffective tax avoidance. The provision does not impose a separate necessity and proportionality test. The court reviews the disclosure decision for rationality, recognising HMRC’s expertise. A limited, intended-confidential disclosure to journalists did not sufficiently interfere with private life or reputation. Article 1 Protocol 1 does not protect mere prospective loss of future income. The appeal was dismissed.

Ingenious and a subsidiary sought judicial review of an HMRC official’s off-the-record briefing to The Times about film investment schemes and their principal promoter. They alleged breach of section 18 of the Commissioners for Revenue and Customs Act 2005, interference with Article 8 of the European Convention on Human Rights, and breach of Article 1 of Protocol 1. Sales J rejected the claims in the Administrative Court: [2013] EWHC 3258 (Admin). The claimants appealed. The central issues were whether the disclosures were made for the purposes of an HMRC function, whether a necessity and proportionality test applied, and whether the disclosures engaged or violated Convention rights.

1. Appeal dismissed. The Court of Appeal upheld the Administrative Court’s rejection of the claims.
2. For the purposes of the appeal, HMRC accepted that information held under section 18 included information generated by HMRC itself and information clearly in the public domain. The relevant disclosure concerned HMRC’s own view that the film schemes were ineffective and would be challenged.
3. The phrase “in connection with a function” was construed broadly. HMRC’s functions were not confined to collecting tax in particular cases. They included the general objective of raising tax revenue and reducing the effect of tax avoidance schemes which HMRC genuinely considered ineffective. Informing potential investors of HMRC’s concerns could therefore fall within the statutory exception.
4. The HMRC Information Disclosure Guide was not binding on the construction of the statute. It could be considered as commentary, and might assist on reasonableness or legitimate expectation, but it could not determine the meaning of section 18.
5. Section 18 did not contain an implied necessity and proportionality test. The proper question was whether the disclosure was rationally considered by the relevant official to be for the purposes of an HMRC function. The court was not the primary decision-maker and should not review the facts de novo. HMRC’s evaluative judgment was subject to review for irrationality, having regard to its experience and expertise: Accenture Services v HMRC [2009] 857.
6. The disclosure was rational. The journalists already knew of the principal promoters of film schemes, and identifying the claimants did not amount to irrational targeting in the circumstances. The position might differ where one provider was selected from numerous comparable providers without a proper reason.
7. On Article 8, the limited disclosure was intended to remain with the journalists and was made in circumstances where they already knew of the claimants and their schemes. Its quality and effect differed materially from the disclosure considered in Mikolajova v Slovakia, application no. 4479/03, judgment of 18 January 2011. It did not constitute a sufficient direct or grave interference with private life or reputation to make the claim succeed.
8. The Article 1 Protocol 1 claim concerned prospective loss of income. Goodwill was said to be diminished only because future income might be lost. Such prospective income was not a possession. The approach in Denimark v UK [2000] 30 EHRR 133, followed domestically in R (Malik) v Waltham Forest NHS Care Trust [2007] EWCA Civ 265, [2007] 1 WLR 2092, was applied. Even if Article 1 Protocol 1 had been engaged, informing the public of HMRC’s view of the schemes was within the State’s wide margin of appreciation and was not manifestly without reasonable foundation.

• Court of Appeal (Civil Division) — On 4 March 2015, dismissed the appeal.
• High Court of Justice, Administrative Court — Sales J rejected the challenge to HMRC’s disclosures in judgment and order dated 25 October 2013, [2013] EWHC 3258 (Admin).