HMRC: no agreement to anonymise decision

A solicitor has lost an appeal against an HMRC refusal to anonymise its decision, so as to prevent the Solicitors Regulation Authority (SRA) from discovering that a penalty had been imposed on him for ‘deliberate inaccuracy’.

But Judge Barbara Mosedale, sitting in the First-Tier Tribunal (Tax Chamber) last month, did grant anonymity until any appeal against her decision was exhausted, so the solicitor remains unnamed for now.

The case concerned a married couple, Mr and Mrs B, who in 2010 declared their property purchase was £100,000 – below the stamp duty threshold – when in fact it cost them £763,750 and they owed £30,550 in tax. HMRC discovered it the following year and the couple paid the outstanding duty when the matter was raised.

The couple was told a penalty of over £16,000 would be imposed and their details may be published. Eventually the penalty was paid, after correspondence which nowhere said their anonymity was assured.

Later, the appellants were warned HMRC was considering publication of their details. They wrote back, saying Mr B was a solicitor and that “publication might result in his professional body taking steps to strike him off”, which “could have serious consequences for him and his family not to mention the 50 or so members of staff which [Mr B] employs in his business”.

They applied to make a late appeal against the penalty decision on the basis that they had only paid it on the understanding that no publication would take place. At the same time, they sought an order to anonymise the penalty decision.

In her ruling, Judge Mosedale did not agree with the appellants that they had agreed to settle with HMRC only if their details were not published. She said they had accepted HMRC’s offer to settle, and therefore “I entirely reject the appellants’ case that if there was a settlement it was on terms which included the issue of publication… As a matter of contract law, therefore, I find that the appellants and HMRC have settled the matter. That ousts the jurisdiction of this tribunal.”

Accepting she might be wrong on the contract and jurisdiction, the judge also applied tests for extending time limits under CPR 3.9 in accordance with the recent Upper Tribunal decision in McCarthy & Stone (Developments) Limited and others (PTA/345/2013), in turn applying the Court of Appeal decision in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537.

But the judge said: “Mr B’s own evidence did not show him to be a person of high ethical standards. He considered that the SRA would be concerned if he, as a solicitor, was liable to an deliberate inaccuracy penalty, but he was prepared to accept liability to one as long as no one, including the SRA, found out. He has not informed the SRA about the penalty and does not intend to inform the SRA about it.”

She did accept that for the purpose of the application, the appellants had an arguable case. However, “the appellants are the authors of the situation in which they find themselves” because if Mr B had communicated clearly to HMRC his reservation about publication, he would have had time to make a timely appeal.

Judge Mosedale concluded by referring to the case of Mr A [2012] UKFTT 541 (TC), a broadcaster and household name who was refused anonymity in his tax appeal concerning an alleged tax avoidance scheme in which the judge said granting anonymity would give rise “to the suspicion… that riches or fame can buy anonymity”.

She said: “My conclusion is that this case, similarly to that in Mr A, concerns a taxpayer in an exceptional position, but that exceptional position, so far from justifying anonymity, positively favours full publication. Mr B wishes to hide alleged misdemeanours from the SRA, his clients and his potential clients.

“The tribunal is here to administer justice: it is inimical to justice for the tribunal to help Mr B keep from his professional body and his clients matters which even he thinks the SRA would consider relevant to his practice as a solicitor.”

Further, she said: “While a solicitor’s good reputation is important to the solicitor, that that reputation is deserved is an important matter to the public and his professional body. The public has an interest in knowing if a solicitor has been found liable to a deliberate inaccuracy penalty and his professional body has the right to consider whether disciplinary proceedings are appropriate.

“In these circumstances, it would be inimical to justice for the tribunal to protect the solicitor’s identity and for that reason, a final decision that has the effect (as mine does) that the solicitor is liable to a deliberate inaccuracy penalty should be published without anonymity.”

However, she agreed to anonymise her decision until the appeal process on the decision was exhausted.


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