Mark Mitchell & Anor. v The Commissioners for HMRC

HMRC’s statutory confidentiality duty does not prevent disclosure of taxpayer information where a statutory exception applies. Under sections 18(2)(a) and 18(2)(c) of the Commissioners for Revenue and Customs Act 2005, HMRC may disclose material for its functions or for civil proceedings, including an appeal in the First-tier Tribunal, without an implied requirement that it relate to an issue already pleaded. The First-tier Tribunal cannot adjudicate HMRC’s exercise of those statutory powers; a public-law challenge belongs in judicial review. Separately, the Tribunal may use its case-management powers to order disclosure. Rule 27(2) is only a starting point, and the overriding objective may require wider disclosure where fairness demands it. Disclosure and admissibility are distinct questions.

HMRC issued personal liability notices against Mark Mitchell and Paul Bell under paragraph 19 of Schedule 24 to the Finance Act 2007, alleging that deliberate VAT inaccuracies by companies could be attributed to them as shadow directors. Their appeals to the First-tier Tribunal were directed to be heard together. The FTT ordered disclosure of some documents from HMRC’s investigation of Mr Mitchell but refused disclosure of documents concerning other companies and general credibility. The Upper Tribunal dismissed Mr Mitchell’s appeal and Mr Bell’s appeal: [2021] UKUT 0250 (TCC). Mr Bell appealed to the Court of Appeal. The central issues were HMRC’s statutory power to disclose confidential information, the FTT’s jurisdiction, and the proper scope of disclosure in a fair hearing.

The appeal was allowed. All three judges agreed that HMRC could in principle disclose the disputed documents under sections 18(2)(a) and 18(2)(c) of the Commissioners for Revenue and Customs Act 2005, and that the FTT had no jurisdiction to adjudicate HMRC’s exercise of those powers.

1. Disclosure for fairness in ongoing tax litigation could fall within HMRC’s function of collecting and managing tax. Neither section 18(2)(a) nor section 18(2)(c) contained an implied condition that the material be relevant to an issue already pleaded. Civil proceedings included proceedings before the FTT. Public-law controls, including rationality, remained applicable. Section 18(2)(e) applied where disclosure was made pursuant to a tribunal order.
2. Whipple LJ and Carr LJ formed the majority in holding that the statutory disclosure regime and Rule 5 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 operated independently. The FTT could determine a properly framed Rule 5 case-management application to permit or require disclosure, although it could not supervise HMRC’s voluntary exercise of its statutory powers. Arnold LJ considered that the FTT lacked jurisdiction to determine HMRC’s particular application, but agreed with the result.
3. Disclosure and admissibility were distinct. Rule 15 concerned the later admission or exclusion of evidence and did not govern disclosure. Rule 27(2) provided only a starting point. In an appropriate case, the overriding objective could require broader disclosure approaching standard civil-procedure disclosure. The presence of two appellants with potentially divergent cases and HMRC’s possession of documents concerning one appellant which might assist the other justified reconsideration of that scope. The approach in Smart Price Midlands [2019] EWCA Civ 841 was applied.
4. The FTT had materially misstated the disclosure question, conflated disclosure with admissibility, and failed to engage with fairness. The UT was wrong to uphold that decision merely as case management. The relevant parts of both decisions were set aside, and no order was substituted for the disputed refusals. The matter was not remitted because HMRC could disclose the documents without tribunal permission.

• Court of Appeal (Civil Division) — The appeal was allowed. The relevant refusals of disclosure were set aside and no order was substituted.
• Upper Tribunal (Tax and Chancery Chamber) — The Upper Tribunal dismissed Mr Bell’s appeal and Mr Mitchell’s appeal: [2021] UKUT 0250 (TCC).
• First-tier Tribunal (Tax Chamber) — The FTT ordered disclosure of some disputed documents but refused disclosure of certain Level 2B and Level 4 documents.