Anonymity in tax cases

The Upper Tribunal has stressed that applications for private hearings and taxpayer anonymity should be dealt with promptly by the FTT and not deferred: HMRC v A Taxpayer [2024] UKUT 12. Moreover, such applications should be made well in advance of any hearings.

In this case, the Upper Tribunal overturned the decision of the FTT that all preliminary hearings should be held in private, pending a decision on anonymity at the substantive appeal. The FTT considered that the order was necessary so as not to render the anonymity application futile. However, the Upper Tribunal noted that the case illustrated the difficulties which can arise where an application by a taxpayer for privacy and/or anonymity is delayed. The practical effect of deferring the substantive application had been that the taxpayer had been able to avoid the open justice principle for all preliminary proceedings for over two years, without any consideration having been given to
their reasons for seeking privacy or anonymity.

Background

The case concerns an application by a taxpayer for their case to be heard in private and anonymised during an application for the case to be stood behind other lead cases. The reasons given were the need to protect the taxpayer’s private and family life, to maintain the confidentiality of sensitive information and avoid prejudice in the interests of justice.

The FTT decided that representations be made on the anonymity application prior to the substantive hearing and in the meantime preliminary hearings should be heard in private on the basis that to do otherwise would render the anonymity application futile. HMRC appealed the order that all preliminary hearings should be held in private.

Upper Tribunal decision

The Upper Tribunal noted that the starting point in tax cases is that all hearings must be in public. There is an obvious public interest in it being clear that the tax system is being operated even-handedly, an interest that would be compromised if hearings are in private. Indeed, it has been held that the presumption for hearings in public is now stronger than even a few years ago.

The direction that preliminary hearing be held in private was problematic. For one, it did not provide for anonymity of those proceedings such that any preliminary proceedings would be listed as held in private but showing the taxpayer’s identity absent any further successful application for anonymity. Moreover, the term “preliminary proceedings” covered a wide-range of matters from case management to strike-out applications or preliminary issue determinations.

Where an application for privacy or anonymity is made, it must be based on cogent evidence. The FTT must consider that evidence and balance it against the presumption of open justice. The decision by the FTT in this case that privacy was justified by the need to prevent the anonymity application being rendered futile was a mistake of law.

Firstly, the lack of any such order would not have rendered the anonymity application futile. The correct approach would have been for the taxpayer to make an application for privacy or anonymity in relation to the particular preliminary proceedings. In doing so, the taxpayer would have had to provide supporting evidence. Such an approach would not have rendered the wider anonymity application futile.

Secondly, the very wide privacy order made by the FTT was disproportionate and failed to consider whether and if so why such a blanket derogation from the principle of open justice was justified. It was clear something had gone awry on the FTT’s decision. Standing back, the taxpayer had obtained the benefit of privacy for all preliminary proceedings without having produced any evidence of harm or prejudice for an open-ended period in a position where, should they withdraw or settle and not pursue the substantive anonymity application, that benefit would be irreversible. That was not a position that could be justified and amounted to ”a blanket derogation from open justice by the backdoor”.

Comment

The Upper Tribunal went on to say that all such privacy or anonymity applications should be considered by the FTT when they are made and should not be deferred. Applications for anonymity should be made well in advance of any trial such that should anonymity be refused, an applicant can take into account such refusal in deciding whether to continue the matter and should the applicant wish to appeal the decision on anonymity, that should not delay the timetable for the substantive appeal.

In this particular case, the Upper Tribunal ordered that the decision be initially anonymised pending any appeal by the taxpayer, but in the absence of an appeal (or refusal of permission to appeal) then it should be republished in un-anonymised form.