Tax avoiders don’t have human rights – Philippa Whipple QC

6 November 2013 by

film_movie_tape_0_1R (on the application of Ingenious Media Holdings plc and Patrick McKenna v Her Majesty’s Revenue and Customs [2013] EWHC 3258 (Admin) –  read judgment 

Sales J has rejected an application for judicial review by Ingenious Media Holdings plc and Patrick McKenna, who complained that senior officials in HMRC had identified them in “off the record” briefings.

Ingenious Media is an investment and advisory group which promotes film investment schemes which allow participators to take advantage of certain tax reliefs and exemptions.  HMRC has long been fighting to close down these “film schemes”, with some success (see the Eclipse 35 appeal).

In 2012, the Times began investigating tax avoidance, which led two of its journalists to invite David Hartnett, then the Permanent Secretary for Tax at HMRC, to a meeting.   Mr Hartnett is no stranger to the Administrative Court, having been responsible for the controversial tax settlement with Goldman Sachs, described by the judge in an  earlier judicial review brought by UK Uncut Legal Action Ltd as “not a glorious episode in the history of the Revenue”.

It was agreed that the meeting would be “off the record”, which David Hartnett understood would mean that nothing said during that meeting would be published.  During the briefing, which lasted 75 minutes, the journalists suggested that Mr Hartnett had reached unduly lenient settlements with some taxpayers (a possible reference to Goldman Sachs and other high profile cases); Mr Hartnett denied this vigorously and gave as an example the way HMRC had dealt with certain individuals involved in film schemes.  When one of the journalists suggested that one of these individuals was Mr McKenna, Mr Hartnett confirmed that was correct.  Later in the conversation, Mr Hartnett referred to Mr McKenna in personal terms, noting that he was “a big risk” for HMRC, and went on to describe the film schemes in general as “scams for scumbags”.

The Times published articles  on 21 June 2012 which quoted from the briefing, including these colourful phrases, in contravention of the “off the record” agreement.  The article (behind paywall) has already been considered in some detail by the Courts following the unsuccessful libel suit brought against the Times by another person named in that article: Elton John, [2012] EWHC 2751 (QB) (transcript not on BAILII).  In that case the judge, Tugendhat J, had no difficulty accepting the proposition that an imputation that a person is engaged in tax avoidance is capable of being defamatory.


Back to this case: the Judge started his analysis with s 18 Revenue and Customs Act 2005, which provides that HMRC may not disclose any information held by HMRC except if that disclosure is “made for the purposes of a function” of HMRC.  He then referred to s 51 of the 2005 Act which refers to those functions; oddly he does not refer to s 1 of the Taxes Management Act which sets out those functions, being the “collection and management” of the tax.

The Judge concluded that there was a rational connection between HMRC’s function of collecting tax and the disclosures made by Mr Hartnett in the course of the briefing, and his decision to make the “limited revelations” that he did was based on a judgment which fell within lawful parameters [para 39].

Mr Hartnett’s judgment of how to handle the exchange with the journalists was evaluative, and the Court approached its task with deference, taking account of HMRC’s limited resources and the relevance of rebutting “misplaced” suggestions that HMRC might have reached inappropriate deals with certain taxpayers, and that the disclosures made in the event were “very limited” [paras 40-51].

The Judge did accept that there had been an interference under Art 8(1) in the sense that private life includes a right of confidentiality, but justified such interference under Art 8(2) as proportionate; he did not consider that there had been any interference with  Art 8(1) in the sense of any damage to reputation, but if there was interference in that sense it too was justified and proportionate [paras 62-70].

He concluded that there was no breach of Art 1 Protocol 1, that being argued on the basis that the disclosures would deter people from using the lawful services of the Claimants.  He held that any interference with the right to peaceful enjoyment of property or possessions in the form of the Claimants’ business was justified [paras 71-76].

Finally, there was no abuse of power because the Claimants were not deliberately targeted in the course of the discussion [para 77].

The Judge gave permission to appeal to the Court of Appeal.


It is difficult to understand why, during his conversation with the journalists, Mr Hartnett did not simply adopt the standard HMRC line that HMRC does not comment on the affairs of individual taxpayers.  After all, the discussion about tax avoidance and HMRC’s determination to clamp down on it could perfectly well have been conducted without commenting on the affairs of individuals at all.  Some may find it surprising that the Court was prepared to sanction Mr Hartnett’s departure from standard practice in this way.

The fact that the disclosures were made “off the record” seems to miss the point.  First, disclosure on that basis was not safeguarded in any way at all by HMRC, as is evident from the fact that the journalists simply chose, in the event, to publish and be damned; and anyway, it is not the extent of disclosure but the fact of disclosure which is the issue – in what way, precisely, can it be said that breaching taxpayer confidences to journalists is “for the purpose” of the tax collection function?

At least part of the explanation may lie in the context of the case:  for obvious reasons tax avoiders (suspected or proven) generate little sympathy in the Courts or with HMRC.

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  1. Corrupted Mind says:

    I think the really interesting issue is the HMRC rule that they should not comment on the tax affairs of indviduals or corporations. It runs contrary to all the transparency that already runs through the system. The rate of tax payable is a transparent and published. The reliefs available are transparent and public. For all listed companies accounts must be filed and there are strict reporting requirements and for unlisted companies accounts basic accounts are filed at companies house. For indviduals receiving their pay PAYE you appear as a line on the companies accounts. For individuals who operate differently (i.e. consultants, contractors, et al) they are file an individual return and in many cases accounts with companies house. So one does wonder why HMRC need to operate under the veil of secrecy in the first place?

    In any case, there is nothing odd about the Judge not referring to section 1 of the TMA because it is self evident that in a modern democracy the role of any public body is not merely what is set down in the statute but also the inform the public about how it carries out its work — with the briefing falling squarely within the parameters of that function. On the question of the officials deviation from the standard policy – I think the judge took a commonsense approach – what was the official’s objective in his disclosure. Was it to name and shame McKenna or to demonstrate that his department was fully informed? I think it is clear from the limited disclosure that it was the latter. This is what plays into the fact that the briefing was off the record – where publicly he may have merely intimated that he was informed, off the record he could go further. Thus informing the public albeit through the media that his department had their guns trained on the right areas. That someone could argue Art 8 or more quizzically Art 1 AP1 is the more baffling thing.

  2. Mark says:

    When all is said and done here, there are two basic issues.
    Should HMRC have any further briefings with the Press. Clearly there are times when it is appropraite to have discussions and the rules of “off the record” have been ignored by a journalist. It must therefore be neccessary for HMRC to consider a blanket ban on access to its officials by the Press. This may damage the press as they no longer have officials to talk to but at least HMRC can ensure confidentiality for people by adopting this approach.

    What constitutes a “neccessary step” in the persuit of a law breaker. I feel that tax avoidance is not sufficient to cover the release of personal information. The persuit of cash is not the same as the hunt for a murderer.

    Overall there has been a fundemental breach of trust here. HMRC should not have disclosed what they did. The press should not have reported on it the way they did.

    As a consequence there should be disciplinary action aganist both parties for this failure of ethics and public trust.

  3. Surely it is just about arguable to say that by giving the media details of tax avoiders, it helps with tax collection by bringing about adverse publicity for the dodgers?

  4. Angry Grandparent says:

    I think the current thinking of government in some quarters where rights are no longer guaranteed nor universal and attached to say a financial contribution to access those basic rights is a very dangerous step along an almost terminally slippery slope.

    It is of course especially with a vs government department not a clear cut or simple argument, e.g. a company defrauds government through tax evasion a large sum, then uses that large sum to defend and even gain victory over government is going to taste bitter to most taxpayers but one wonders just what is going on at the “Revenue” when we see vast sums of fairly appropriated taxes simply sidelined and seemingly with HMRC’s blessing yet they spend enormous effort chasing down the little people for paltry sums.

  5. dw says:

    The judgment states: “I consider that Mr Hartnett could properly and rationally take the view in the circumstances of the briefing that it would assist HMRC in the exercise of their tax collection functions to seek to foster a spirit of co-operation with the journalists, and that to do that it would be desirable to discuss the matters in which they were interested and about which they were already well informed with measured frankness. Mr Hartnett could properly and rationally take the view that the limited disclosures which he made in relation to the Claimants were directly relevant to the discussion with the journalists and were appropriate to be made to foster such a spirit of co-operation”.

    Suppose a journalist goes to Mr Hartnett and says, “I have information about someone who is cheating on his taxes. Give me a copy of [Celebrity X]’s tax returns and I’ll tell you more”. It seems that, under this judgment, Mr Hartnett would be perfectly justified in handing over the information. Which cannot be right.

  6. M.HIll says:

    In which case: no human rights for terrorists either!
    Prepare the new gallows!

    1. jacklumber says:

      We can inform the public that respectable honest hard working tax paying British citizens, men women and children, British families have had their Human Rights taken away, their family lives destroyed by Home Secretary Ms May, because they have a NON EU spouse!
      Yet this doesn’t apply to EU nationals who can come and go as they please, apply for and get benefits and housing. No Ms May has targeted and destroyed the family lives of only those British citizens who have a NON EU spouse! Yet PM Cameron says family life is important! What total hypocracy by the toxic Tory nasty party!

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