On 4 March 2015 the Court of Appeal handed down judgment in R (Ingenious Media Holdings plc) v HMRC. Sir Robin Jacob delivered the judgment of the court. This was an appeal from Sales J’s judgment in this matter.

Ingenious Media Holdings plc (“Ingenious”) and its subsidiaries conducted, inter alia, a business of promoting investment schemes in the form of partnerships intended to allow participating taxpayers to take advantage of certain tax reliefs and exceptions associated with films. HMRC maintain that all or most of these film schemes are ineffective for tax purposes, a matter that is currently being litigated. This case concerned statements made by HMRC’s then Permanent Secretary for Tax, Dave Hartnett, to two Times journalists in what Mr. Hartnett thought was an off-the-record briefing on tax avoidance schemes. The disclosure made to the journalists was that HMRC did not accept that the Appellants’ film schemes generated the tax reliefs claimed and that HMRC was going to challenge their validity. Mr. Hartnett acknowledged that he was aware of Patrick McKenna, the founder of Ingenious. Mr. Hartnett said that he thought that HMRC would be ultimately successful in defeating film schemes. This was information of HMRC’s own creation, not information given to it by taxpayers or by the Appellants in this case. Following the disclosure, various comments made by Mr. Hartnett were published in The Times, albeit attributed only to a “senior Revenue official”, in apparent breach of Mr. Hartnett’s understanding that they would not be published at all.

In brief, the Court of Appeal has held that:

  • Mr Hartnett and HMRC did not breach section 18 of the Commissioners for Revenue and Customs Act 2005 in making the disclosure Mr Hartnett did, to journalists from The Times in what HMRC understood to be an off-the-record briefing. “Information held” was conceded by HMRC to have a wide meaning capable of including information generated by HMRC as well as information supplied to HMRC. But the Court also construed the meaning of “for the purpose of a function of the Revenue” in section 18(2) widely, meaning that the disclosure was permissible.
  • Although Article 8(1) of the European Convention on Human Rights (“ECHR”) was engaged in respect of the founder of Ingenious, the disclosure had no effect on the Appellants’ private life and there was no evidence of any damage to reputation as a result of it.
  • Article 1 Protocol 1 (“A1P1”) to the ECHR was not engaged because the case concerned a mere loss of future income said to result from the disclosure, which is not an interference with “possessions” within the meaning of A1P1. Although this was determinative of the A1P1 claim, the Court also indicated that it was in the public interest for HMRC to let the public know its view that film investment schemes were ineffective, regardless of the fact that no formal closure notices had been issued at the time.

R (Ingenious Media Holdings plc) v HMRC [2015] EWCA Civ 173, 4 March 2015