Ingenious Media Holdings plc & Anor, R (on the application of) v Commissioners for HMRC, [2016] UKSC 54

The Permanent Secretary for Tax in HMRC (Mr Hartnett), gave an interview to two financial journalists from The Times to discuss tax avoidance. The meeting was recorded and was agreed to be “off the record”. On 21 June 2012 The Times published two articles on the subject of film schemes and tax avoidance which identified Mr McKenna and Ingenious Media with tax avoidance film investments in direct quotes from the interview. Mr McKenna and Ingenious Media brought a claim for breach of a duty of confidentiality, in the form of an application for judicial review. Although s. 18(1) of the Commissioners for Revenue and Customs Act 2005 provided:

Revenue and Customs officials may not disclose information which is held by the Revenue and Customs in connection with a function of the Revenue and Customs

s. 18(2)(a)(i) provided that s. 18(1) did not apply to a “disclosure … made for the purposes of a function” of HMRC.

Lord Toulson started by indicating (at para. 17) that under “the common law of confidentiality”:

where information of a personal or confidential nature is obtained or received in the exercise of a legal power or in furtherance of a public duty, the recipient will in general owe a duty to the person from whom it was received or to whom it relates not to use it for other purposes.

Although this “principle may be overridden by explicit statutory provisions” (para. 18), under the “principle of legality:”

“Fundamental rights cannot be overridden by general or ambiguous words.”

Accordingly, s. 18(2)(a)(i) was to be construed narrowly, so that Parliament should not

be taken to have intended by subsection (2)(a)(i) to confer on officials a wide ranging discretion to disclose confidential information about the affairs of individual taxpayers. (para. 25)

In rejecting HMRC’s arguments that the disclosure was justified, he stated (at paras. 34-35):

… [A] general desire to foster good relations with the media or to publicise HMRC’s views about elaborate tax avoidance schemes cannot possibly justify a senior or any other official of HMRC discussing the affairs of individual tax payers with journalists. [T]hat the conversation might have led to the journalists telling Mr Hartnett about other tax avoidance schemes …is far too tenuous to justify giving confidential information to them.

… The fact that Mr Hartnett did not anticipate his comments being reported is in itself no justification for making them.

A senior British tax official disclosed, in an “off the record” interview with some journalists, that the schemes of a particular promoter of film tax shelters had been generating large losses to the fisc, and they published this and other confidential information. HMRC argued that this disclosure was justified by a statutory provision which authorized a “disclosure … made for the purposes of a function” of HMRC, noting their “general desire to foster good relations with the media or to publicise HMRC’s views about elaborate tax avoidance schemes,” as well as to the possibility of getting tips from the journalists.

In rejecting HMRC’s position, Lord Toulson J noted that under “the common law of confidentiality”:

where information of a personal or confidential nature is obtained or received in the exercise of a legal power or in furtherance of a public duty, the recipient will in general owe a duty to the person from whom it was received or to whom it relates not to use it for other purposes.

He then stated (at para. 19) that to construe the statutory exception to confidentiality broadly:

would run counter to the principle of construction known as the principle of legality, after Lord Hoffmann’s use of the term in R v Secretary of State for the Home Office, Ex p Simms [2000] 2 AC 115, 131. He explained the principle as follows:

“Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual.”