In 2012 HMRC’s then Permanent Secretary for Tax, Dave Hartnett, had an ‘off the record’ (but audio-recorded) meeting with two Times financial journalists, intended as a background briefing on tax avoidance. One topic of discussion was film investment schemes, designed to utilise tax relief for film production partnerships. Mr Hartnett made a number of comments about one agency, Ingenious Media, and its founder Patrick McKenna, including that Mr McKenna had “never left [Mr Hartnett’s] radar”, that “he’s a big risk”, that HMRC “would like to recover lots of the tax relief” from Ingenious’ schemes and that “we’ll clean up on film schemes over the next few years”.
Perhaps to Mr Hartnett’s surprise, these quotes appeared verbatim in The Times a week later in an article about Ingenious and Mr McKenna, attributed to a “senior Revenue official”. Defamation proceedings were begun, but these were dropped in favour of a judicial review by Ingenious and Mr McKenna, arguing that HMRC had breached its statutory confidentiality obligations and their human rights. The High Court and Court of Appeal found against them, but the Supreme Court yesterday allowed Ingenious’ appeal.
Lord Toulson considered the claim (despite being a judicial review) as a straightforward claim for breach of confidence: HMRC were under a statutory obligation of confidentiality which (properly construed) prohibited disclosure of individuals’ tax information in these circumstances, the decision to disclose was not one that attracted any deference in the Court’s review, and the decision was unlawful: “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”. The fact that the conversation was ‘off the record’ did not help: “every schoolchild knows that this is how secrets get passed on”.
What does this tell us? Three immediate thoughts.
Firstly, many public authorities are subject to statutory confidentiality obligations, as well as to the common law. However, public authorities also often seek to share confidential information in the exercise of their functions, both with other public bodies and other interested entities. The Supreme Court’s restrictive approach to the statutory ‘functions’ which could permit such sharing (only where “reasonably necessary for HMRC to fulfil its primary function”, not its ancillary functions), if more widely applied, limits the possibility of doing this.
Secondly, the Court’s willingness to shoehorn the common law of confidence into judicial review, without any deference to executive judgment, is surprising. HMRC may rue its view, noted in the Court of Appeal judgment, that “there was no point in objecting to the form of proceedings”: the Supreme Court has given a decidedly private law judgment on what, properly considered, was a public law issue. This potentially (given the speed and relatively lower expense of a judicial review) might give privacy claimants a useful remedy against public authorities in some circumstances. With that said, it is hard to see what remedy Ingenious can obtain here – damages are not available in domestic judicial review, and their human rights arguments seem to have been dropped after the Court of Appeal. One option may be private law proceedings against the Times on the Spycatcher third-party principle, relying on the Supreme Court’s judgment.
Thirdly, the short shrift given to HMRC’s ‘off the record’ argument is a salutary warning to public officials, perhaps reflecting wider post-Leveson concern about media relationships with public bodies. ‘Off the record’ can have many shades of meaning in different contexts, and discovering a difference of understanding after publication may, as here, be rather too late.