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HMRC’s permanent secretary for tax, Dave Hartnett, has sent a letter to the Public Accounts Committee, setting out the department’s legal view on the disclosure of taxpayer confidential information to a parliamentary committee.
The move follows allegations by media outlets that the Revenue made deals with telecoms provider Vodafone and Goldman Sachs, an investment bank, which led to concerns about taxpayer privacy.
In his letter, Mr Hartnett quotes Commissioners for Revenue and Customs Act 2005, s 18 and s 19, which explain general features of the regime for handling taxpayers’ data and how it affects disclosures to Parliament. In essence, he concluded that taxpayer confidentiality should be maintained in such circumstances.
The Revenue boss writes, ‘The legislation provides a strong regime for ensuring the confidentiality of information in HMRC's hands – particularly where the information in question relates to an identifiable person's tax affairs.’
With regard to making disclosures to Parliament, he says there is ‘no express power in the legislation’ to allow this to happen – but ‘HMRC has consistently taken the view that it is lawful to pass non-identifying information to select committees’, although it did not follow that ‘it is necessarily properly part of HMRC's functions to provide disclosure of taxpayer specific information to a select committee’.
In 2009, it was decided by the Revenue to ‘maintain the confidentiality of information, which identifies and relates to specific taxpayers in responding to questions from the committee’.
This took account of ‘the damaging effect on voluntary compliance by taxpayers, which would follow inevitably from any relaxation in our approach to taxpayer confidentiality.
‘Any disclosure would undermine the open and transparent basis on which we seek to work with taxpayers, as the most effective and efficient way to collect tax, leading to a reduction in revenues collected without intervention and to additional costs for HMRC and taxpayers,’ claims Mr Hartnett.
He continues: ‘Secondly the damaging effect on ministers, who by long tradition remain at arm's length from taxpayer specific information, in order to protect them from allegations of impropriety or political interference.
‘Thirdly, the damaging effect on our relationship with other government departments and agencies: successive ministers have insisted that information may only be disclosed through express gateways in legislation, often against strong opposition, and any change in our stance risks undermining our ability to insist on such express legal gateways.
‘Fourthly, the damaging effect on our reputation for impartiality in the handling of individual cases – and last, the fact that it would be inappropriate and unfair to create any real risk of exposing officials to criminal sanction in the course of their duties,’ the Revenue's permanent secretary for tax tells Public Accounts Committee.
