Tax is as usual a constitutional matter, and any perceived
injustice or breach of the taxpayer's fundamental rights has always
been a source of revolution - our Civil Wars being no exception-
and of a nature to engender assertions of sovereign
independence, the Boston Tea Party being another. It might then
have appeared perfectly reasonable to the British that the American
colonies upon the eastern seaboard make some contribution to the
cost of defending them from the influence of the French and the
then more extensive Louisiana. However, the outcome of that
assertion of fiscal independence decided the British to have been
overbearing and wrong.
Insomuch as the current echanges of information might appear
perfectly normal to a populist unfamiliar with the underlying
ramifications as to confidentiality, the tax issue has not gone
away.
Ingenious Media Holdings
So what happened in Ingenious? Basically the Permanent
Secretary for Tax to HMRC, Dave Hartnett, tried to
obtain information that he thought certain journalists might have
had on a particular taxpayer or more generally by tempting them
with juicy titbits of otherwise confidential information "off the
record". The manner in which the excuse produced for such behaviour
was treated as child-like, perhaps Lady Hale's contribution, merits
no further amplification.
However, having no truck at all with HMRC's
arguments attempting to dilute its absolute duty of confidentiality
Lord Toulson, readng the unanimous judgment of his peers said
in rejecting some pettyfogging by the Revenue lawyers :
"27. The
same principle applies whether or not the duty of confidentiality
is contractual. It applies equally where the person or body owing a
duty of confidentiality holds a public office or is a public body
or is performing a public function, subject to any contrary
statutory provision.
28. It
is a cardinal error to suppose that the public law remedies and
principles associated with judicial review of the exercise of
administrative power, developed by the common law from the ancient
prerogative writs, occupy the entire field whenever the party whose
conduct is under challenge holds a public position. It is important
to emphasise that public bodies are not immune from the ordinary
application of the common law, including in this case the law of
confidentiality. The common law is multi-faceted and remains
the bedrock of the English legal system.
29. Having
rejected the view that section 18(2)(a)(i) should be interpreted as
making the disclosure of information about individual taxpayers a
matter for the discretion of HMRC officials, subject only to a
rationality control, I disagree with the view of the lower courts
that it was not for them to approach the disclosures made by Mr
Hartnett as if they were primary decision makers. In accordance
with ordinary principles, the question of breach of confidentiality
is one for the court's judgment."
He then dispatched the "Off the record" argument to the ashtray
reserved for Kipling's Clerk's baccy, as well as consigning Henry
VIII and his progeny of clauses to the common law history
books:
"21. A
similar principle can be seen in the courts' approach to the
interpretation of powers delegated under a so-called Henry VIII
clause. In R (Public Law Project) v Lord
Chancellor [2016] 3 WLR 387, para 26, Lord Neuberger of
Abbotsbury PSC, with the agreement of the other members of the
court, cited with approval the following passage
in Craies on Legislation, 10th ed (2012), edited
by Daniel Greenberg, at para 1.3.11:
"as with all delegated powers the only rule for construction is
to test each proposed exercise by reference to whether or not it is
within the class of action that Parliament must have contemplated
when delegating. Although Henry VIII powers are often cast in very
wide terms, the more general the words used by
Parliament to delegate a power, the more likely it is that an
exercise within the literal meaning of the words will nevertheless
be outside the legislature's contemplation." (Emphasis
added)". Not by me.
Good thing too! Hardly the right approach to the English Common
Law duty of confidentiality. Let alone fairness and equity.
The cheek of the executive as to overriding common law rights,
and they are, by elasticating general terms of a statute to cover
all such use of statutory tax entitlement as peccadilloes is
something that they appear to have taken on board from their
contacts with their Lycra-clad fellow vélocipedistes at the OECD
symposium of doubting Thomases in Paris.
HMRC's arguments in front of a court can be quite facile and
childish at times, especially when in the wrong, hence the judicial
rebuke from their Lordships and her Ladyship at his paragaph 31,
"every schoolchild knows that...":
"30. "Off the record" is an idiom and
like many idioms can bear different shades of meaning. It may, for
example, be intended to mean "strictly confidential" or it may be
intended to mean "not to be directly quoted or attributed". The
judge found that Mr Hartnett understood it to mean that the
interview was to be a "background briefing", intended to influence
the journalists' views and what they wrote about matters affecting
HMRC but not to be published. There has been no appeal against that
finding, but nothing in my view turns on what precisely Mr Hartnett
intended.
" 31. As a matter of principle, a
disclosure of confidential information may sometimes be permissible
on a restricted basis. (In the case of W v Egdell,
previously cited, the doctor was lawfully justified in passing on
his report to those who had responsibility for the plaintiff's
care, whereas it would not have been lawful to pass it to someone
who had no such responsibility.) But an impermissible disclosure of
confidential information is no less impermissible just because the
information is passed on in confidence; every schoolchild knows
that this is how secrets get passed on. The references by the
courts below to the nature of the interview leave me in some doubt
whether they had a clear regard for the distinction." Enough said
on child-like logic, I think.
Coming back to the statement of law that "The common law
is multi-faceted and remains the bedrock of the English legal
system".
No one has yet questioned whether the executive's powers to
actually exchange information automatically on the scale envisaged
is common law compliant. It is not "covered" by any
prerogative right. It seems in fact to be unconstitutional in the
fundamental sense of the term, as the common law is here in its
very nature and essence "constitutional". Following on from the
Bill of Rights designation of the counsellors of the previous
Stuart scumbags (I merely use Dave Hartnett's reported terminology
as a cricket bat) as "evill", it is clear that there is a
constitutional vilificaton of such practices. The common law is, in
my submission a bulwark against executive missbehaviour and
does not admit any contrary extension of prerogative rights into
the hands of the executive without at the very least a specific
statute, as opposed to a Henry VII clause.
Hold that thought. Bear in mind that the French Sénat expects
their current détaché at the OECD to report back
to them regularly. It is not an informal afternoon tea and biscuits
arrangement ....
During the French Senatorial Committee on tax evasion's visit to
London in 2012, Dave Harnett met with the Dominati /Boucquet group
and the only report available of that meeting at the French
Embassy, a place of territorial significance, follows. It seems to
indicate a discussion limited to a comparison between the French
and the British concepts of a general anti avoidance rule. What is
curious is that the British individuals present in Knightsbridge,
Richard Murphy, John Christensen, and incidentally Dave Hartnett
were not appraised of the significant differences and drawbacks of
the French abus de droit mechanism. I should
point out that I was one of the individuals sitting on the Jersey
Finance group which met with the Mission: they were singularly
negatively aggressive, as they evidently had been pre-briefed by
the French equivalents of Tax Research and Tax Justice and were
therefore in a self inflicted degree of ignorance. their questions
were vague and therefore did not give rise to any particularly
useful responses. They were in London the following week to
meet:
"Lundi 25 juin 2012
- son excellence l'ambassadeur Bernard
Emié
- M. John Christensen, Tax Justice
Network
- M. Richard Murphy, Tax Research
UK
- M. Dave Hartnett, permanent
secretary for tax, HMRC
- M. Forent Barrois, attaché
fiscal
- Mme Laurence Dubois-Destrizais,
chef du service économique régional
- M. Harry Partouche, conseiller
financier
- M. Joseph Stead, Christian
Aid"
The perhaps innocent discussions in front of a HMRC
representative did not include the French attempt to allocate a
deemed fiscal identity to a taxpayer to determine a form of deemed
income stream or "rente", which faute de
mieux would be presumed "correct".
In other words the French, but perhaps not yet the British are
working towards a fiscal fiction which will become
economic réalité at the level of international
institutions.
However, ever since the French attempt to create a notional
"rente" upon an figurative level of deemed capital
entitlement producing a "correct tax liability" appears to have
infected the fiscal consciousness of the left, or rather those left
in London.
"Lors de sa mission à Londres, les interlocuteurs
rencontrés par votre rapporteur ont déclaré envier l'existence en
France d'un principe général de lutte contre l'évasion fiscale pour
l'adoption duquel ils militent parfois dans leur propre pays. Le
temps a manqué pour tempérer un enthousiasme que notre droit ne
mérite pas tout à fait.
.......
Au demeurant, elle inspire des réformes essentielles comme
celle de l'imposition des bénéfices en Europe sur une base
consolidée avec une clef de répartition obéissant dans son esprit à
ce principe de proportionnalité. Pour guider la réflexion, une fois
encore la référence à la « nouvelle économie géographique » et à sa
théorie des « rentes d'agglomération » paraît une voie féconde.
L'écart manifeste entre la dette fiscale construite par le
contribuable et la dette qui résulterait de la taxation de sa «
rente », telle
- 131 -
qu'envisagée par le législateur pourrait constituer un
motif de redressement d'une évasion fiscale."
Translation: "To guide one's thinking, once again,
the reference to the "new economic geography" and to its theory of
agglomerated entitlements" seems a plentiful direction to take. A
manifest differential between the fiscal debt created by the
taxpayer and the debt resulting from the taxation of his "rente",
as envisaged by the legislation could be the grounds of a tax
reassessment of tax evasion."
However, given Mr Hartnett's past excesses, can one be pardoned
for querying whether further specifically individualised items were
not also released in front of not only the French Parliamentary
delegation, but also into the hearing of the animi of two
NGO's?
To do his intelligence some justice, other than legal or fiscal,
probably not.
However, the insinuation from this meeting of the minds is that
something equally sinister is afoot when the whole idea of Brexit
is to have our fiscal sovereignty reinforced, not eroded.
Now what about Information Exchange on an automatic basis? Has
Statute, in other words, have the Statutory Instruments
implementing the GFA with the USA under FATCA or for that matter
CRS unwittingly fallen within the scope of this?
Are these generalised information sharing arrangements no more
or less than "Henry VII clauses" dressed in borrowed robes?
Unfortunately that argument is unlikely to get an airing except
in an extreme case, for example, kidnapping and execution following
from a leakage of confidential information abroad. Can one trust
HMRC to keep information technically outside the parameters of
FATCA and CRS to itself, or is Dave Hartnett's example likely to be
followed? Naming and Shaming may well lead to violence outside the
jurisdiction.
"Watch the wall my Darling as the information goes by." ....?
Their Lordships and Lady Hale did not.
Let me be clear, if the common law bulwark is of a
constitutional nature, is it correct to overrule it by a mere
statute or statutory instrment incorporating CRS, BEPS or any other
international organisation's collectivised "opinion" upon what is
best practice? I would support the obvious answer to that by
stating that the British constitution cannot be affected by the
competences of the OECD, through an abusive extenton of
governmental "prerogative" as these are defined by its
constitutional Treaty, which does not include instituting
constitutional amendments in its Member States, and neither does
HMG have the prerogative right to remove constitutional common law
in this manner. It is only saved by the use of the statute as a
bludgeon.
Is that sufficient, from the perspective of the effect of the
Boston Tea party, and for that matter the English civil wars? There
is certainly more to the British constitution in its tectonically
half unwritten format than meets the eye.