Should You Fight for Anonymity in a Tax Dispute?

On 21 November 2024, the Upper Tribunal (UT) decision in Revenue and Customs v The Taxpayer [2024] UKUT 364 (TCC) was published, bringing to the forefront once again the delicate balance between privacy, transparency in legal proceedings, and the rights of individuals involved in complex tax disputes with HM Revenue & Customs (HMRC).

The case, which centred around an individual seeking anonymity during a tax dispute, illustrates not only the tension between public interest and privacy but also the importance of a measured approach to protecting taxpayer confidentiality in sensitive matters.

The Case in Brief

HMRC had successfully appealed against a First Tier Tribunal (FTT) direction that preliminary proceedings in a matter should be kept private. The UT held that should either party be granted permission to appeal, the decision will continue to be anonymised.

The taxpayer appealed, and in doing so applied for directions that if he withdrew the substantive FTT appeal, then UT proceedings would remain anonymised.

The UT refused the directions, permission to appeal was not granted, and no attempt was made to appeal to the Court of Appeal.

The substantive appeal was withdrawn, and a separate application was then made for anonymity in respect of the UT proceedings. This was opposed by HMRC and interested third parties including Times Media Limited and News Group Newspapers Ltd (together “NGN”) – who had also made requests for disclosure, PA Media and Tax Policy Associates Limited.

The Application

On behalf of the taxpayer, it was submitted that seeking anonymity should not be the very thing that causes the loss of privacy. It was argued that the taxpayer should have the right to make an informed choice. Therefore, it should be open to a taxpayer to make an anonymity application and, to the extent the application was not successful, then decide whether to:

1. Continue with proceedings with a loss of privacy; or
2. Withdraw and maintain privacy.

This approach, the taxpayer argued, ensured the effectiveness of the Article 8 right to privacy when balanced against the principles of open justice.

The Decision

The taxpayer’s application was refused.

The Tribunal held that “it is not the application for privacy which leads to publicity (if a privacy application is refused) but the choice to bring the tax appeal (or any other civil proceedings).”

Therefore, the risk of publicity was triggered by commencing the appeal process and not by the rejected application.

The Tribunal also noted that at no stage had the taxpayer provided any evidence of the harm that would have justified anonymity and so struggled to conclude that the taxpayer’s Article 8 rights should take precedence over any other considerations.

Commentary

HMRC enquiries are generally confidential. This means that the information disclosed by taxpayers (including their identity) during the enquiry is treated as confidential.

However, once a taxpayer makes an appeal to the FTT (or any other court or tribunal), the proceedings become public. This means that the details of the case can be made public.

The principle of open justice is a cornerstone of the legal system, ensuring transparency and public accountability. However, for some individuals involved in tax litigation, the desire for privacy often clashes with this principle.

Many high-profile taxpayers who are advised that they have a good arguable case against HMRC tend to settle (either by accepting HMRC’s conclusions or by mediation) rather than have their clash with the Revenue made public for fear of damage to their reputation. For some, even the mere association with a tax investigation can lead to public stigma, regardless of the outcome.

Managing sensitive information during an appeal

Information being made public must be balanced against the strength of your case. If thinking about the appeal route and concerned about sensitive information being in the public domain:

• When preparing your grounds of appeal, avoid including unnecessary details that could compromise that. Remember that a third party can ask for a copy of the pleadings in a case.
• The Tribunal encourages parties to seek to resolve disputes without the need for a hearing. An appeal does not prevent you from seeking to resolve the matter by way of Alternative Dispute (ADR).
• If there are preliminary legal points that need to be resolved before proceeding to a full hearing, make this clear as this could potentially narrow the scope of the dispute and the nature and role of factual evidence.
• Explore whether a statement of agreed facts and issues is appropriate. This may reduce the need for lengthy witness statements, as core facts are agreed.
• Consider enlisting the services of a reputation management expert to help manage any adverse press which may arise.

Conclusion 

Anonymity and privacy are not automatic protections; they must be justified based on the potential harm that disclosure could cause. Taxpayers should not assume that their identity will remain confidential, and they should consult with experienced legal advisors who can argue effectively for privacy protection where possible.

By fully understanding the options available to safeguard sensitive information and carefully considering the advantages and disadvantages of a public hearing, taxpayers can make informed decisions about whether to litigate.

Our Tax Risk & Dispute Resolution practice has substantial knowledge and experience in this specialist area of law. For further information, please contact Morag Ofili or any of our partners in the Tax team.

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