The Supreme Court has ruled HM Revenue & Customs unlawfully disclosed confidential information in an ‘off the record’ background briefing.
In June 2012 an ‘off the record’ background briefing took place between the press and then permanent secretary of HM Revenue & Customs, Dave Hartnett.
At the briefing Mr Hartnett supplied confidential information to two journalists about the film production partnerships that Ingenious operated.
The briefing took place during the ordinary course of an enquiry into the film production partnerships and before Ingenious had decided to commence legal proceedings at the First Tier Tax Tribunal.
HMRC sought to justify Mr Hartnett’s briefing on the basis that there was a general desire on the part of tax office to foster good relations with the media and to publicise views regarding what they considered to be elaborate tax avoidance schemes.
However, today (19 October) the five judges of the Supreme Court unanimously decided the arguments put forward by HMRC could not possibly justify a senior official discussing the affairs of individual tax payers with journalists.
Neither did the judges accept HMRC’s defence that because Mr Hartnett did not expect his comments to be reported that he was justified in making them.
The judgement went on to say that the whole idea of HMRC officials supplying confidential information about individuals to the media on a non-attributable basis is, or should be, a matter of serious concern.
An Ingenious spokesperson said: "We are delighted that the Supreme Court has unanimously found in our favour.
“This was never about restricting HMRC's ability to collect taxes, nor was it about preventing the press from investigating public interest stories.
“Consistent with HMRC’s own guidelines, this was simply about upholding the basic legal principle that HMRC owe a duty of confidentiality to each and every tax payer and their affairs should not form the subject of off the record background briefings to the media.”
A HMRC spokesperson said having earlier won this case in both the High Court and Court of Appeal, HMRC was naturally disappointed by the judgment handed down by the Supreme Court.
The spokesman said: “HMRC defended this case because it considered that the disclosure made by Mr Hartnett was lawful. However, the Supreme Court has decided otherwise and we will examine the judgment in detail.
“It is important to clarify that this judgment has no bearing on the three Ingenious film partnerships considered by the first tier tribunal, where HMRC was successful. This protected around £400m in revenues for the Exchequer.”
Back in August, HM Revenue & Customs (HMRC) won two major tax avoidance battles against the Ingenious Film Partnership and Icebreaker avoidance schemes in cases worth more than £820m in tax owed and interest.
The Ingenious scheme tried to use artificial losses arising from investments in a range of movies, including the blockbusters Avatar, Life of Pi and Die Hard 4 – and the Icebreaker scheme attempted to create artificial losses from investments in limited liability partnerships.
Users of the Ingenious scheme were given the opportunity to settle on similar terms nearly four years ago and now face big bills for interest and legal fees on top of the £434m in unpaid tax resulting from the scheme.
Both schemes saw users claim more in tax relief than they had invested.
emma.hughes@ft.com
