Transparency and Accountability of Tax Administration in the UK: The Nature and Scope of Taxpayer Confidentiality

Abstract

The recent controversy surrounding HMRC’s refusal to disclose relevant information voluntarily to Parliamentary Committees has the potential to undermine the important principle of taxpayer confidentiality. HMRC’s current policy only asks whether the information requested would identify a specific taxpayer, and has led to the withholding of information such as whether the Department followed their own internal procedures in reaching a specific settlement “for reasons of taxpayer confidentiality”. The Committee of Public Accounts and the Treasury Committee of the House of Commons, both of whom have unqualified power of access to all information and documents held by HMRC in any event, have complained that this approach prevents proper scrutiny of the process for settling tax disputes involving large companies. This article proposes a distinction between tax information that engages a taxpayer’s right to confidentiality under the common law or Human Rights legislation (“taxpayer confidential information”) and other information held by HMRC, including taxpayer identifying information, which does not engage a taxpayer’s right to confidentiality or privacy (“HMRC’s information”) as a principled and pragmatic basis for balancing the rights of individual taxpayers to confidentiality with the wider interest of the general body of taxpayers in the transparency and accountability of tax administration.

Keywords: Taxpayer Confidentiality, Transparency, Accountability, Disclosure, Privacy, Public interest immunity