Case Preview: R (Ingenious Media Holdings plc and another) v Commissioners for Her Majesty’s Revenue and Customs
04 Monday Jul 2016
On 4 July 2016, the Supreme Court will hear a case relating to whether disclosures made by HMRC to journalists at The Times in relation to Ingenious Media Holdings plc and founder and CEO Mr Patrick McKenna breached the following: (a) HMRC’s duty of confidentiality in Commissioners for Revenue and Customs Act 2005, s.18; (b) the appellants’ legitimate expectation, or were an abuse of its power or a failure to follow HMRC’s existing policy; and/or (c) the appellants’ ECHR, art 8 and art 1, protocol 1 rights.
Ingenious Media Holdings plc is an investment and advisory group, whose business includes the promotion of film investment partnerships.
In June 2012, two journalists from The Times, Mr Alexi Mostrous and Ms Fay Schlesinger approached HMRC for an ‘off the record’ discussion about tax avoidance to inform their background investigations for a proposed article. This resulted in a 75 minute meeting between the journalists and Mr David Hartnett, the then Permanent Secretary for Tax at HMRC. The journalists published an article on 21 June 2012 in which they quoted Mr Hartnett (described as “a senior Revenue official“) describing, among other things, the film investment partnerships as “scams for scumbags” and describing Mr Patrick McKenna, the founder and CEO of Ingenious Media, as on their “radar“, a “threat” and a “big risk“. This was despite the fact that Ingenious Media had at all times been entirely open with HMRC about the financial structure of the film investment partnerships, had engaged and cooperated with HMRC for many years in relation to them and at the time of the meeting between Mr Hartnett and the journalists was still waiting to hear from HMRC in relation to them.
Ingenious Media and Mr McKenna subsequently brought a claim for judicial review of HMRC’s actions in disclosing information to the journalists.
The High Court held that HMRC was justified in providing certain details about the Claimants to journalists in an ‘off the record’ discussion about tax avoidance. Mr Justice Sales rejected the submission that HMRC had breached its duty of confidentiality in Commissioners for Revenue and Customs Act 2005, s.18, stating that there was “a rational connection between the function of HMRC to collect tax in an efficient and cost-effective way and the disclosures made by Mr Hartnett in the course of the briefing” which fell within “lawful parameters“. Mr Justice Sales stated that although there was an “interference” under ECHR, art 8(1), this was justified under ECHR, art 8(2) as proportionate. He also rejected the argument that there was a breach of ECHR, art 1 protocol 1 concluding that the provision did not “disable state authorities from using other, less drastic means of trying to influence behaviour of the public where there are legitimate reasons for doing so.” The argument that there was an abuse of power was rejected on the grounds that Mr Hartnett had not targeted the Claimants.
Ingenious Media and Mr McKenna appealed and were given permission to appeal to the Court of Appeal.
Court of Appeal
The Court of Appeal upheld the High Court’s decision. The Court held that the disclosure by Mr Hartnett to journalists did not breach Commissioners for Revenue and Customs Act 2005, s.18. Sir Robin Jacob stated that a wide view was intended in the construction of the disclosure as “a function of HMRC” and could extend to the function of “raising more tax revenue“. The court also held that neither ECHR, art 8 nor art 1 protocol 1 were breached. Sir Robin Jacob concluded that “it was entirely in the public interest that HMRC should let the public know its views about these schemes“.
Ingenious Media and Mr McKenna appealed the decision and were given permission to appeal to the Supreme Court.
The appeal will be heard today by a panel of five judges comprising Lord Neuberger, Lady Hale, Lord Mance, Lord Kerr and Lord Toulson. A full case comment on the decision will be provided on this blog once judgment has been handed down.
An Olswang team, headed by UKSC blog Editor, Dan Tench, is acting for Ingenious Media.