Ingenious Media revisited: what is the court’s proper place?


Having commented last week on the case of Ingenious Media, it is appropriate now to briefly revisit this case, given that the Court of Appeal on Wednesday unanimously dismissed the appeal by the taxpayers. There is one particular aspect of this judgment which ought to make public lawyers squeamish, and that is the level of deference which the court accorded to HMRC to decide upon issues of privacy and confidentiality.

Ingenious Media at the Court of Appeal

The facts of this case are important in respect of this deference issue. David Hartnett, then Permanent Secretary of HMRC, engaged with two journalists from The Times on an ‘off the record’ basis. The substance of the conversation was of tax avoidance schemes, which were taking advantage of the ‘Film Partnership’ legislative provisions. Over the course of the meeting, Hartnett referred specifically to the appellants, Ingenious Media and Patrick McKenna, as marketers of such avoidance schemes; expanded that these schemes had deprived the public purse of circa £5bn; that McKenna had personally used such schemes and pronounced such schemes as ‘scams for scumbags’. These comments were later quoted, albeit with anonymity attached, in an article published by the journalists on the 21st June 2012. The appellants sought judicial review of the decision of Dave Hartnett to disclose such information to the Times journalists.

What standard of review accordingly should be imposed upon HMRC’s decision to engage with the Times journalists and divulge such information? Hugh Tomlinson QC, renowned Human Rights silk, on behalf of the appellants submitted that in the case of disclosures by HMRC, the correct test to be applied was that of intensive judicial scrutiny. On questions of, inter alia, the effect on reputation of the appellants and their property rights, the court was in as good a position to assess the position as HMRC itself. The Court rejected this proposition:

To me that sounded like an invitation to the court – including the Court of Appeal – to review all the facts de novo as though it were the primary decision maker. I do not accept that. The Court is not a tax-gatherer. It simply is not in a position to evaluate the likely effect of a disclosure on an HMRC function in the same way as an official concerned with the day to day operation of the system [para 46]

The issue of deference

There is no question that HMRC is the rightful ‘tax gatherer’ as empowered with such a duty unequivocally by the Commissioners for Revenue and Customs Act 2005, s. 5. The argument of HMRC in this case is that such disclosures to the press are carried out in conjunction with this duty. Engaging with the press accordingly is in legitimate operation of this duty. (This is well explained by Sales J in the High Court judgment, with whom Sir Robin Jacob agreed at para 30)

That the press should be engaged by HMRC as a means of efficiently operating the tax system is uncontroversial. However, there is a need to distinguish between maintaining good relations with the press and divulging private information. It does not follow that the latter is necessary for the former.

This distinction is important because it goes to the heart of the purpose of judicial review-that the court should not intrude unnecessarily upon the expert decisions which a public authority has taken, but rather to provide a space wherein the court may intervene to substitute its judgment on issues which the court is better placed to make. The determination of legal questions, the protection of human rights, and ensuring a public body does not exceed the boundaries of its power accordingly are issues which the court, rather than the public authority, is better placed to make. For this reason, the Court of Appeal is right to assess that they should not generally substitute their decisions as to the collection of tax for those taken by the body statutorily empowered to make such decisions. However, it does not go so far as to provide that the court should defer to those decisions of the public authority which are made in light of the desire to efficiently collect tax, but which at the same time encroach upon rights to privacy and the duty of confidence.

By broadly conflating deference to public authorities and justiciable issues together, the Court has missed an important distinction, one which goes to the core of judicial review and the separation of powers between the executive and the judiciary.


About taxatlincolnox

Tax law academic. With this blog, I seek merely to contribute to the debate. All thoughts are mine, of course.
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3 Responses to Ingenious Media revisited: what is the court’s proper place?

  1. Pingback: Ingenious Part 3: A trip to the Supreme Court | taxatlincolnox

  2. Pingback: Ingenious Media Part 4: confidentiality, the Public Accounts Committee and Anthony Inglese | taxatlincolnox

  3. Pingback: Case note in the British Tax Review | taxatlincolnox

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