Taxpayer anonymity and tax appeals

The Upper Tribunal has rejected the contention that a taxpayer denied anonymity should be regarded as having a right to withdraw from a tax appeal to maintain their anonymity: HMRC v The Taxpayer [2024] UKUT 364. The principle of open justice is a fundamental feature of the judicial system and there was no principle that the making of an application for anonymity when combined with a tax appeal should not lead to loss of anonymity if that application is refused in the absence of strong factual considerations to the contrary.

The taxpayer in this case had appealed against an HMRC decision denying certain tax deductions claimed by the taxpayer. In the course of that appeal, the taxpayer had successfully applied to the FTT for a case management decision that the preliminary proceedings in the matter by heard in private and be subject of anonymity. HMRC appealed against that ruling to the Upper Tribunal which allowed the appeal and held that the decision should be should be published in unanonymised form subject only to any further appeal against the UT decision.

The taxpayer subsequently applied for permission to appeal and further directions that if they should withdraw their substantive appeal against the tax assessment, then the proceedings before the UT should remain anonymised in any event. In essence, the taxpayer argued that where an individual wishes to avoid loss of privacy and makes an application to the courts / tribunals in order to find out whether they are entitled to privacy in relation to those proceedings, the very process of applying for privacy should not be what causes privacy to be lost. Accordingly, if the application is refused, then an applicant should have a choice between continuing with the proceedings with no anonymity or withdrawing from the proceedings and maintaining anonymity.

The Upper Tribunal has rejected this argument, holding that the principle of open justice may only be derogated from when strictly necessary and where the applicant has shown a justification for anonymity. In particular, the UT noted that "it is not the application for privacy which leads to publicity (if a privacy application is refused) but the choice to bring a tax appeal (or any other civil proceedings). Seeking privacy or anonymity in relation to that appeal may create an additional risk of publicity as a practical matter, but, again, that is the applicant's informed decision to bring the appeal, in a system where open justice is the norm".

Nevertheless, the taxpayer argued that there was judicial support for the proposition that a party who has made a privacy application generally has a choice, regardless of the merits or supporting application, to withdraw the appeal in relation to which the application was made and for all proceedings to remain private and anonymous. Again, the UT has rejected that argument. Each of the cases referred to by the taxpayer concerned situations where the applicant had a strong, arguable case, supported by evidence, for privacy. In contrast, the taxpayer in this case had declined any opportunity to justify or evidence the claim for anonymity. As such, the authorities relied on by the taxpayer did not support a substantial exception to the principle of open justice which applies irrespective of the facts or evidence but simply by the act of making an application for privacy or anonymity.

The UT also rejected the argument that rejection of the anonymity application would have an undue deterrent effect on all privacy or anonymity application. "A person who is party to civil litigation and who makes a privacy or anonymity application does so in the knowledge of the risk that the application might itself attract publicity, either incrementally to the litigation itself or in its own right. The risk that the application is refused will be measured by an applicant by reference to the nature and strength of their reasons, and the evidence to support those reasons, in making the application. [The taxpayer's] formulation seeks to reduce the risk to zero in all cases, regardless of the merits of the case for anonymity. In rejecting that formulation, the only deterrent effect should be in respect of tactical, unmeritorious or unevidenced applications. That outcome would be both desirable and entirely consistent with the principles we have endorse above."

Finally, the UT rejected the argument that the taxpayer's Article 8 right to privacy in the European Convention on Human Rights. A claim that the taxpayer's Article 8 rights would be violated by refusal of anonymity must first require proof as to the harm and second requires a balancing exercise between that harm and the principle of open justice. In this case, the taxpayer had not offered any argument as to how the Article 8 rights would be harmed or how any such rights should be balanced against the principle of open justice.

Comment

The decision is a stark reminder as to the role of the over-arching principle of open justice and the difficulties of justifying anonymity in tax appeals. However, it is worth noting that the case will remain anonymised until the time limit for making an appeal expires or permission for an appeal is refused. At that point, however, the decision will be republished to include the name of the applicant.