R v Commissioners for Her Majesty’s Revenue and Customs

The statutory duty protecting taxpayer information is subject to an exception only where disclosure is reasonably necessary for HMRC to perform its primary function. General or ambiguous statutory language does not authorise a broad discretion to disclose confidential information for collateral purposes.

Whether disclosure breached confidentiality is for the court to decide by applying the law to its own assessment of the facts. The question is not confined to rationality review merely because the duty-holder is a public body. An unauthorised disclosure remains impermissible when made confidentially or “off the record”, although restricted disclosure may exceptionally be justified by genuine operational necessity.

HMRC’s Permanent Secretary for Tax gave two journalists an off-the-record briefing about tax avoidance. He disclosed information about Mr McKenna, Ingenious Media and HMRC’s attitude towards film investment schemes which they had promoted. The ensuing newspaper articles attributed some of that information to a senior Revenue official.

The appellants sought judicial review for breach of HMRC’s statutory duty of confidentiality under section 18 of the Commissioners for Revenue and Customs Act 2005. Sales J dismissed the claim, applying rationality and proportionality review. The Court of Appeal upheld that decision: [2015] EWCA Civ 173; [2015] 1 WLR 3183.

The issues were the construction of section 18(2)(a)(i), the court’s proper approach to HMRC’s conduct, and the significance of the briefing being off the record.

1. Appeal allowed. Section 18(1) of the Commissioners for Revenue and Customs Act 2005 reflects the established duty of taxpayer confidentiality. Section 18(2)(a)(i) permits disclosure only to the extent reasonably necessary for HMRC to fulfil its primary function. Lord Toulson gave the judgment, with which Lady Hale, Lord Mance, Lord Kerr and Lord Reed agreed.

2. HMRC’s proposed construction was too broad. Combining sections 5, 9 and 51 to authorise anything considered expedient, incidental or conducive to revenue collection would erode the primary duty and render some specific exceptions substantially otiose. Under the principle of legality, fundamental rights are not overridden by general or ambiguous words. The greater the generality of the language, the harder it is to rebut that presumption. Parliament could not be taken to have authorised officials to discuss individual taxpayers for collateral purposes such as cultivating press relations.

3. The existence of the section 19 defence for a person who reasonably believes that information is already public did not require an expansive construction. Public availability does not necessarily destroy confidentiality. Even if section 18(1) extended beyond information confidential in the ordinary sense, section 18(2)(a)(i) did not confer a wide discretion to disclose confidential taxpayer information.

4. Whether confidentiality has been breached is ordinarily for the court to determine by applying established principles to its own assessment of the facts. Public bodies remain subject to the ordinary common law. The lower courts therefore erred by treating HMRC as the primary decision-maker and limiting judicial scrutiny to rationality review.

5. An impermissible disclosure does not become permissible because it is made in confidence or off the record. Restricted disclosure can sometimes be lawful, but its justification depends upon the recipient and purpose. Media disclosure of individual taxpayer affairs might exceptionally be necessary for a genuine operational reason, but general media relations, publicity about avoidance and speculation that journalists might reveal useful information were insufficient.

6. The information was confidential and material. Its disclosure was not reasonably necessary for HMRC’s investigations or another revenue function. The section 18(2)(a) justification therefore failed. The parties were invited to make written submissions on the form of order.

1. United Kingdom Supreme Court: Allowed the appeal from the Court of Appeal: [2016] UKSC 54.

2. Court of Appeal: Sir Robin Jacob, Moore-Bick LJ and Tomlinson LJ upheld Sales J’s dismissal, holding that section 18(2)(a)(i) should receive a wide meaning and that the court should not determine the facts as primary decision-maker: [2015] EWCA Civ 173; [2015] 1 WLR 3183.

3. High Court, Administrative Court: Sales J dismissed the judicial review claim after applying rationality and proportionality review: [2013] EWHC 3258 (Admin).