HMRC have won a case at the Court of Appeal (CoA) although their rights were clearly detailed in the relevant legislation.

HMRC had issued two personal liability notices (PLNs) to two taxpayers who HMRC considered were shadow directors of two companies that had both gone into liquidation but had incurred penalties for deliberate inaccuracies on VAT returns.  The amount of the PLNs was around £12m, with half due from each taxpayer.

HMRC wished to disclose certain information to one of the taxpayers but sought an order from the First-tier Tribunal (FTT) to disclose this information.  It was expected by HMRC that the litigation would be acrimonious with one taxpayer attacking the other taxpayer and so didn’t want to breach its duty of confidentiality to either taxpayer.  One of the taxpayers disagreed with the order granted by the FTT and so appealed to the Upper Tribunal and ultimately the CoA.

The CoA held that a court order to disclose wasn’t necessary.  Under the legislation that created HMRC from the combination of the Inland Revenue and HM Customs & Excise powers were given to HMRC so it could disclose information for the purposes of civil proceedings.  The appeal of the PLNs would be a relevant civil proceeding and therefore no court order was necessary to enable HMRC to disclose information to either of the taxpayers.

The decision can be found at: Mark Mitchell & Anor. v The Commissioners for HMRC – Find case law (nationalarchives.gov.uk)

This case can now proceed to the appeals of the PLNs.  It will be interesting to learn the outcome of case, not so much from a technical tax perspective, but due to the aggressive nature of the litigation.

Please contact us if you are being investigated by HMRC, particularly under Code of Practice 9 investigations where HMRC suspect fraud.