High Court Decision: HMRC Can Retain Seized Documents for Civil Investigations, Clarifies Legal Boundaries

Citation: [2023] EWHC 3021 (Admin)
Judgment on

Introduction

The High Court’s decision in Newcastle United Football Company Limited v Commissioners for HM Revenue and Customs (HMRC) [2023] EWHC 3021 (Admin) addresses pivotal questions concerning the retention and use of documents seized during criminal investigations by HMRC when such investigations come to an end. The judgment analyses the interplay between various statutes, including the Police and Criminal Evidence Act 1984 (PACE), the Criminal Justice and Police Act 2001 (CJPA), and the Commissioners for Revenue and Customs Act 2005 (CRCA), particularly focusing on the proper application of seizure and retention powers of HMRC.

Key Facts

The case revolves around documents seized during a criminal investigation into Newcastle United Football Company Limited’s (the Appellant’s) tax affairs. Following the closure of the criminal inquiry, questions arose as to whether HMRC could retain copies of these documents for civil investigations into tax irregularities. The Crown Court initially denied the Appellant’s request for the return of the documents, and the High Court was left to consider several foundational questions of law regarding document retention under PACE, and HMRC’s powers to share information internally under the CRCA.

Seizure and Retention of Property (PACE and CJPA)

The court analyzed Section 22 of PACE which governs the retention of seized property by constables or relevant public authorities such as HMRC, specifically assessing whether it requires the return or deletion of copies made from seized documents once a criminal investigation concludes. The court made a distinction between the retention of original seized property and copies of such property, determining that Section 22 does not prescribe requirements for the return of copied material.

Furthermore, the court examined Section 63(3) of the CJPA, which excludes the application of Section 57 (and therefore Section 22 of PACE) to cases involving copies of documents. This was crucial as it was held that Section 57 does not apply to copies, meaning that once an original document is copied, the retention power under PACE does not extend to the copy.

Sharing of Information within HMRC (CRCA)

Central to the case was Section 17 of the CRCA, which permits HMRC to use information across different functions within the organization. The court affirmed that HMRC can share information obtained during its criminal investigations for civil tax collection purposes under Section 17(1). This, the court noted, is distinct from the retention of the documents and is not precluded by Section 22 of PACE.

Use of Copies by HMRC

The Court clarified that while HMRC has broad powers to use and share information obtained via copies, such use is constrained by public law principles, duties of confidentiality, and the Human Rights Act 1998 (HRA), particularly regarding privacy rights under Article 8 of the European Convention on Human Rights (ECHR).

Outcomes

The High Court dismissed the Appellant’s appeal, concluding that Section 22 of PACE does not regulate copies of seized documents and allowed HMRC’s cross-appeal, confirming that HMRC can share information across its civil and criminal departments post-investigation under Section 17 of the CRCA. Moreover, the Judge was deemed incorrect in imposing terms or conditions on HMRC’s handling of information they retained which was addressed in Question 5.

Conclusion

The decision clarifies the delineation of powers and obligations concerning retention and use of documents by HMRC following a criminal investigation. Importantly, the judgment underscores that the statutory regime addresses the protection of property rights and associated privacy/confidentiality concerns differently – with PACE focusing on the former and CRCA on the latter, along with general principles of public law, confidentiality, and HRA considerations. The ruling’s implications reach beyond tax investigations to other contexts where documents are seized under criminal powers, delineating the limits and scope of authority held by law enforcement and regulatory bodies in the retention and use of data.

Related Summaries