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CoA dismisses film relief scheme promoter case against HMRC chief

Thursday, 5 March, 2015

CoA Decision

Patrick McKenna, Chief Executive of film tax relief scheme promoter Ingenious Media, has lost his Court of Appeal challenge to the actions of HM Revenue and Customs' former boss Dave Hartnett.

McKenna objected to remarks Hartnett made about him during an off the record press briefing in 2012 which led to his name appearing in an unfavourable context in a newspaper.

In June 2012, two reporters from The Times met Hartnett, then Permanent Secretary for Tax, for a background briefing. The meeting was explicitly agreed to be 'off the record', which Hartnett took to mean that nothing said could be published.

During the interview the reporters asked Hartnett about the film relief schemes and McKenna's role in some of them. This led Hartnett to verify that McKenna had personally claimed tax relief via his film schemes. Hartnett did, however, go on to describe the film schemes in negative terms, by stating it was HMRC's view that they were 'scams for scumbags'.

The Times went on to publish a news story repeating some of this material.

This article prompted McKenna to launch a defamation action against HMRC. He later dropped this action and began a judicial review challenge to HMRC, claiming that Hartnett's briefing had breached his right to privacy under Article 8 of the European Convention on Human Rights. He also alleged that HMRC had breached s18 of the Commissioners for Revenue and Customs Act 2005. He claimed damages of GBP20 million.

The judicial review was heard by Mr Justice Sales in the High Court in 2013. He dismissed McKenna's application. There was, he said, a rational connection between the function of HMRC to collect tax in an efficient and cost-effective way and the disclosures made by Hartnett in the course of the briefing. Hartnett's decision to make the 'limited revelations' that he did was based on a judgment which fell well within the lawful parameters set out in the 2005 Act, said Sales. He went on to dismiss the human rights complaint on the grounds that Hartnett's disclosures were 'clearly lawful' under Article 8 because they were made 'for the legitimate objectives identified [and] were proportionate to those objectives'.

McKenna then took the matter to the Court of Appeal of England and Wales (EWCA), where this week he was again defeated. The court held that HMRC was entitled to take the widest possible view of its discretion to disclose taxpayer information under the 2005 Act.

'Any citizen who was actually contemplating investing in a scheme which the Revenue considered did not work would surely expect the Revenue to be able to publicise its concerns', said Sir Robin Jacob in the EWCA. 'He or she might even feel aggrieved if the Revenue did not […] The citizen would expect the Revenue to be able to broadcast its concerns from at least the time the Revenue had formed the view that those concerns were serious.'

Sir Robin Jacob also dismissed the Article 8 privacy complaint. The judgment points out that Hartnett believed the briefing was off the record and in any case The Times journalists already knew about McKenna's involvement in the film relief schemes.

(Ingenious Media Holdings Plc & Another, R (On the Application Of) v Revenue & Customs, 2015 EWCA Civ 173).

  • Ingenious is currently in a dispute with HMRC over the validity of its film relief schemes, but that was not the issue directly at stake in this case.

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