David Walbank KC releases video review of Newcastle United Football Co Ltd v HMRC [2024] STC 73

Having previously been Standing Counsel to the Revenue & Customs Prosecutions Office and Standing Counsel to the Department for Business, Innovation and Skills, David now specialises in the defence of allegations of business crime and white-collar fraud.

Alongside his day-to-day practice in court, he is the founder and presenter of the criminal law video updating website: [CrimeCast.law]. He also writes the fortnightly ‘Crime Brief’ column for the premier legal periodical, the New Law Journal.

This week, he has released three more video reviews about business crime cases, including on Newcastle United Football Co Ltd v HMRC [2024] STC 73. For free and instant access to this video case review, visit [CrimeCast.Law].

The judgment of the King’s Bench Divisional Court (Singh LJ & Garnham J) concerns the powers of HMRC (1) to retain paper copies and digital images subsequently taken of original documents that were seized during the execution of a search warrant and removed to HMRC premises under the powers contained in the Criminal Justice and Police Act 2001(2) to share those copies and images with their colleagues conducting a civil tax investigation.

David said as follows:

“The facts were that Newcastle United Football Company Ltd was subject to both criminal and civil investigations into its tax affairs. In April 2014, HM Revenue & Customs notified the club that it was conducting a civil inquiry under Code of Practice 8 into football agents’ fees. Three years later, in April 2017, in the course of a criminal investigation into the club’s tax position, HMRC obtained search warrants in the Leeds Crown.  A week after that, the warrants were executed at the club’s premises in Newcastle upon Tyne. HMRC used the powers under the Criminal Justice and Police Act 2001to seize and take away material which it was not reasonably practicable to examine on site during the search – subject, of course, to the requirements to examine the property as soon as reasonably practicable after the seizure; limit the examination to what was required to determine which of the property seized was within the scope of the warrant; keep it separate from any property seized under other powers; and return any property that was outwith the warrant as soon as reasonably practical after the whole examination was finished. In January 2018, HMRC issued VAT assessments for over £2 million and issued a claim against the club in the County Court for more £4.25 million of National Insurance Contributions. The club then appealed against the VAT assessments to the First Tier Tribunal (Tax Chamber). The review that HMRC was required to undertake into which documents were covered the warrant, and whether Legal Professional Privilege applied, spanned fully 16 months in 2019 and 2020, at the end of which more than 9,000 items remained in dispute between the parties.

Then, in 2021, HMRC informed the club that it was terminating the criminal investigation. However, it added an important rider. Given that HMRC had uncovered what it described as ‘tax non-compliance of a serious nature’, it said that it would only return the paper documents originally seized but would retain digital copies that had since been made of documents thought to be potentially relevant to the ongoing civil investigation and would share them with the civil investigators. The club then applied to the Kingston Crown Court for the return of those digital copies. That application was refused, but the judge did, on a later date, direct that the digital copies should be scheduled and the court should hear and determine any disputes about particular documents. The club appealed by way of case stated against the court’s refusal to order the return of the digital copies and HMRC cross appealed against the subsequent directions regarding the scheduling of the digital copies and the Crown Court’s determination of any disputes between the parties with regard to any particular digital images.

In giving the judgment of the Divisional Court, Singh LJ set out the key provisions as follows. Section 22 of the Police and Criminal Evidence Act 1984 reads as follows:

“(1) Subject to subsection (4) below, anything which has been seized by a constable or taken away by a constable following a requirement made by virtue of section 19 or 20 above may be retained so long as is necessary in all for circumstances.

(2) Without prejudice to the generality of subsection (1) above:

(a) anything seized for the purposes of a criminal investigation may be retained, except as provided by subsection (4) below-

(i) for use as evidence at trial for an offence; or

(ii) for forensic examination or for investigation in connection with an offence …

…

(4) Nothing may be retained for either of the purposes mentioned in subsection (2)(a) above if a photograph or copy would be sufficient for that purpose.”

By virtue of the Police and Criminal Evidence Act 1984 (Application to Revenue and Customs) Order, those provisions applied to Revenue investigators as they would to constables.

Singh LJ also referred to ss.17 & 18 Commissioners for Revenue and Customs Act 2005 which stipulate what use HMRC can make of information acquired in the discharge of its functions, and to Entick v Carrington (1765) 19 State Trials 1029; Ghani v Jones [1971] QB 693; Marcel v Metropolitan Police Commissioner [1992] Ch 225; R (Scopelight) v Chief Constable of Northumbria [2010] QB 438; Chief Constable of Merseyside v Owens [2012] EWHC 1515 (Admin); R (Business Energy Solutions Ltd) v Preston Crown Court [2018] 1 WLR 4887 & R (PML Accounting Ltd) v HMRC [2019] 1 WLR 2428.

Singh LJ also alluded to the fact that there are different types of interest which the common law seeks to protect in this context. The first is property rights in the physical paper document and the second is an interest in the privacy or confidentiality of the information which is contained in that document, as opposed to the document itself. His Lordship then held as follows:

1. The statutory requirement to return the original documents is concerned with property rights. Where a paper copy is taken, property in the paper on which the copy is made vests in the public authority which has produced that copy. Where a digital copy is taken, both the hardware and software will again be the property of the public authority which produced the image.
2. The law protects the information contained in a document in a different way, through obligations of confidentiality and the law relating to privacy and data protection.
3. Section 22 PACE is concerned with original documents seized during the search and not with any paper copies or digital images subsequently taken. It is meant to ensure that there is no greater interference with a person’s property rights than is necessary to achieve the purposes of a criminal investigation. Once the criminal investigation has concluded, the statutory provision does not require either the return or the permanent deletion by HMRC of paper copies or digital images taken subsequent to the original search and seizure.
4. Even if section 22 of PACE does apply, the words ‘so long as is necessary in all the circumstances’ encompass the situation where HMRC retains the paper copies and digital images for its public functions other than criminal investigation, including the collection of taxes.
5. In respect of information obtained for one of HMRC’s functions, section 17 of the 2005 Act permits the department to share that information in connection with its other functions, subject only to any restrictions or prohibitions contained in any statute or international agreement.
6. Even if the power to retain documents under section 22 of PACE lapses when a criminal investigation comes to an end, that cannot be equated to a restriction or prohibition on the use of information in documents of the sort contemplated by section 17 of the 2005 Act.
7. Section 17 of the 2005 Act does not, however, confer an unfettered discretion. It is governed by the normal principles of public law and is also subject to the laws of confidentiality and the protections enshrined in the Human Rights Act 1998.
8. In the instant case, once the judge ruled that HMRC had power under section 17 of the 2005 Act to share the copies with its civil investigation team, he was functus officio and he erred in subsequently imposing restrictions on the exercise of that power.

And so, for all these reasons, the Divisional Court dismissed the club’s appeal against the Crown Court’s refusal to order the return of the digital copies and it allowed HMRC’s cross-appeal against the restrictions subsequently imposed on the sharing of those copies.”