CH207323 - How to do a compliance check: establishing the facts: asking for information: information from professionals about their clients

The medical and legal professions owe their clients a strict duty of confidentiality. If they break this duty they may be subject to a legal action by their clients.

If legal or medical professionals argue that their duty of confidentiality to their clients make them unable to comply with informal requests for information you may find that the following will help put their concerns to rest.

Duty of confidentiality

HMRC’s strict statutory duty of confidentiality to their customers is enforceable by criminal prosecution and carries a maximum penalty of two years imprisonment (section 19, Commissioners for Revenue and Customs Act 2005). This means that any information seen is safe in our hands and could not be passed on unless there is an express statutory gateway that allows us to do so.

Assurance about use of the information

You should give an assurance that any information about their clients (for example large dental bills) will not be used in initiating, or as any part of, a check into their clients’ tax affairs.

The practical points

You are only interested in material that may be relevant to a person’s tax position or duties of excise, although this may be mixed with private information about clients. You are unlikely to be able to understand medical shorthand or jargon without professional assistance and you do not have the time or the inclination to interpret it. But if a legal or medical professional wishes to take steps to cover up medical or legal information, that is their right.

Examination of Records

You could offer to examine documents in the professional’s presence, where practical.

Given the potential sensitivity of the information the professional may hold and the serious consequences that may follow from releasing it, you should not treat reluctance to comply with an informal request for information or documents alone as a sign that the person is being uncooperative.

In HMRC’s view FA08/Sch36, like its predecessor TMA70/S19A, overrides the duty of confidentiality. This view was accepted by the Special Commissioners in Guyer v Walton, an appeal by a solicitor (SPC 274/01) against a notice issued under TMA70/S19A. Note that the part of this decision relating to disclosure of legally privileged documents has been overridden by the House of Lords judgement in the case of R v Special Commissioners and another, ex parte Morgan Grenfell & Co. Ltd, but the finding on client confidentiality stands. Therefore, a properly issued formal notice will enable you to proceed with your check and protect the person from a potential legal action by their client, subject to your observing the restrictions on personal and privileged information. In most cases the person will prefer the comfort of a formal notice.

For this reason you should frame your requests for information in the expectation that you will need to proceed without delay to the issue of a formal notice. You should seek only information or documents that are reasonably required at that stage of your check. You may issue a further notice or notices at a later date should it become necessary.

As with any request for private information you should consider the rights of privacy under Article 8 of the Human Rights Act before taking any steps to request information or documents. If your request is for sensitive information you should be particularly careful when considering the proportionality of your request. You must be satisfied (and be able to justify, if necessary to a tribunal) that the information is not only relevant to your compliance check but that your action to obtain the information is the least intrusive method of effectively resolving your check, see EM1350+.