HMRC Can Require Disclosure at Request of Foreign Tax Authorities

When the Australian Tax Office (ATO) made a request to HM Revenue and Customs (HMRC) for information about a number of UK companies, HMRC was happy to comply with the request, despite the fact that the companies claimed to have received no notice that information was being sought, nor were the majority of them the companies whose affairs are under investigation by the ATO. The tax at stake is claimed by the ATO to be approximately 230 million Australian Dollars.



In order to obtain the orders necessary to force disclosure, HMRC had to apply to the First-tier Tribunal and obtain permission from the judge. The orders were given. Under the legislation which permits this, there is no right of appeal in the circumstances applicable to this case.



The companies involved, their accountants (who, it is claimed, were actively involved in the scheme under investigation) and their bank (which was also affected) went to court arguing that HMRC’s action cannot be lawful and applied for judicial review of the decision.



The High Court rejected the application.



There is no doubt that the arrangements for information sharing between different tax authorities can have teeth and if a company has dealings with a foreign entity which becomes the subject of a tax investigation in their home country, information may be sought.



Closer cooperation between tax authorities can create problems for businesses – even those whose own affairs are beyond reproach.