In Mark Mitchell and Paul Bell v HMRC [2023] EWCA Civ 261, the Court of Appeal (CoA) ruled that HMRC had discretion to disclose confidential documents obtained through a Code of Practice 9 enquiry about one taxpayer to another.  The CoA First Tier Tribunal and Upper Tribunal did not have jurisdiction over this disclosure.

  • In 2013 HMRC opened an investigation under Code of Practice 9 into the tax affairs of Mr Mitchell and his companies.
  • HMRC discovered Deliberate Inaccuracies and assessed some £12m in penalties.
  • In December 2017, HMRC issued VAT Personal Liability Notices to Mr Mitchell and Mr Bell on the basis that they were both shadow directors of the companies which had since gone into liquidation.
  • Following a Statutory Review which upheld HMRC’s decisions, Appeals were lodged with the FTT which were to be heard together.
  • In preparing their statement of case, HMRC relied on information disclosed by Mr Mitchell in implicating Mr Bell.
  • Mr Bell requested that this information be disclosed to him, but Mr Mitchell refused to offer his consent.
  • HMRC applied to the FTT to disclose the information to Mr Bell which was opposed by Mr Mitchell.
  • The FTT and the UT decided that documents which were relevant to companies named in HMRC’s statement of case should be disclosed, the implication of those decisions was that the other documents should remain private.
  • Mr Bell appealed to the Court of Appeal on the basis that the further documents should be disclosed too.

The CoA found that:

  • HMRC are subject to taxpayer confidentiality.
  • However, HMRC are permitted to disclose confidential documents in fulfilment of their statutory function.  This includes where:
    • HMRC considers that documents are required for an appeal to the FTT.
    • This power extend to all documents that HMRC consider are required, there is no concept of the relevance of those documents.
  • HMRC did not need Mr Mitchell’s consent to disclose the documents and the FTT had no jurisdiction over the disclosure (and by extension the UT had no such jurisdiction). HMRC’s application to the FTT was defective, however:
    • The FTT decision (upheld by the UT) that concluded certain information must be disclosed was upheld, this was within its jurisdiction to decide.
    • The part of the FTT decision (upheld by the UT) that concluded certain other information did not require disclosure was set aside as the FTT did not have jurisdiction over the disclosure powers.

The appeal was allowed and HMRC could disclose the remaining documents, subject to a potential Judicial Review by Mr Mitchell.

Useful guides on this topic

Penalties: Deliberate Behaviour
What penalties apply to deliberate behaviour? What is deliberate behaviour?

Penalties: Errors in Returns and Documents (subscriber)
What penalties apply if you make an error or mistake? Is there a penalty if you fail to tell HMRC about an under-assessment? How are penalties calculated? How do you check penalties? What can you do if you receive a penalty?

Personal Liability Notices
A Personal Liability Notice (PLN) may be issued by HMRC in the event of a company's or a Limited Liability Partnership's (LLP's) failure to pay its tax debts or tax penalties to HMRC. A PLN will transfer the liability to pay the debt to one of its officers.

Directors’ responsibilities and duties (freeview)
What duties and responsibilities does a director have? What is the definition of 'director'?  

External links

Mark Mitchell and Paul Bell v HMRC [2023] EWCA Civ 261

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