Mark Tully v The Information Commissioner [2024] UKFTT 313 (GRC)

“5. This case is concerned with arrangements that HMRC characterise as "Disguised Remuneration" ("DR") schemes, by which an individual receives a reward for the work he performs for another (or services he provides to another) in the form of (i) a modest salary (if employed) or fee (if self-employed) which is much lower than what he would be entitled to be paid or to charge for the work or services, plus (ii) a loan which in effect makes up the difference in terms of remuneration. To take a simple example, he carries out work for which he might have charged £50,000, in return for a £10,000 salary or fee and a loan of £40,000. He is better off than he would have been if he took a salary or a fee of £50,000 for doing the same work, because the loan is supposedly free of any liability to tax or NIC. Moreover, if the salary or fee is kept low enough, he may not have to pay income tax at a higher rate. In many DR schemes, the loan represents by far the greater part of the financial compensation received by the individual in exchange for the work done or services rendered. 6. The loans are often made by trustees of Employee Benefit Trusts ("EBTs") rather than directly by the employer or customer, although the latter will be the source of the funds. In other cases, the loan may be made initially by the employer or customer and then assigned to the trustees of an EBT. The fact that the trustees of the EBT are, or become, the creditor, decreases the likelihood of the loan being called in, as the whole rationale of an EBT is to benefit past, present and future employees. 7. Whilst the salary (or the net profits in the hands of the self-employed contractor) will be liable to income tax and NIC, on the face of it the loan is not income, but rather, a transaction that gives rise to an indebtedness and a liability to repay. In balance-sheet terms the value of the "asset" in the form of the money received under the loan, is balanced against the corresponding liability. Neither item would usually appear in the profit and loss account of a self-employed individual, though the cost of borrowing (e.g. from a bank) might form a deductible expense. In practice, however, the creditor does not enforce the liability for many years, if at all - and is not expected to. The individual is free to spend the money as if it were his income, and rarely makes provision for its repayment. As a matter of economic reality, the loan is part of the reward he gets in return for his work or services, often the major part. 8. The position adopted by the Claimants (and by the promoters of such schemes) is that the loan does not attract a liability to income tax unless and until it is written off, at which point it can be characterised as a benefit. However, it could theoretically remain outstanding indefinitely, even after the death of the employee or trader, without attracting any liability to tax, at least on the capital element. 9. A large number of DR schemes exist, with many different permutations. Many have not been disclosed to HMRC under the disclosure of tax avoidance schemes legislation introduced in 2004 ("DOTAS"). Sometimes the trustees of the EBT are based offshore, making it harder for HMRC to obtain information from them. HMRC's position is, and has been for many years, that these arrangements are ineffective tax-avoidance schemes. The first witness statement of Mr Philip Gilbert, who was at all material times a member of HMRC's counter avoidance directorate, explains how HMRC's views were made known to the general public and to users of such schemes. Cockerill J describes in her judgment in Cartreft at [75]-[86] HMRC's "Spotlight" publications, going back to Spotlights 5 and 6 in November 2009, and other announcements and publications which made clear HMRC's intention to challenge arrangements where moneys which are a reward for the labour of an individual are diverted through some other form (including loans) without payment of PAYE or NIC. 10. Whilst HMRC have mounted successful challenges to certain DR schemes, and legislation was introduced which expressly imposed a liability to tax in respect of certain types of prospective arrangement, it was clear by the time of the 2016 Budget (when the introduction of the Loan Charge was announced) that there was still a proliferation of such schemes, and that the promoters of certain schemes were claiming that the targeted legislation was ineffective. Mr Gilbert explains the difficulties faced by HMRC in seeking to identify such schemes and their users in order to be able to challenge them effectively. The evidence of Ms Jacqueline McGeehan, the Deputy Director of Income Tax Policy at HMRC, is that the Government introduced the Loan Charges as a way to draw a line under this form of avoidance and ensure that tax was paid by scheme users, to be fair to the wider taxpaying population.”

“You recently refused a Freedom of Information request (FOI2021/27539) I submitted, stating that you believe section 14(1) of the FOIA was engaged due to the disproportionate effort that would be required to comply with the request. This response came after the original request (FOI2021/20755, refused under section 12) had already been narrowed by 80%. In the response to my request for an internal review (IR2022/00365), you upheld that refusal on the basis that you hold over 100 documents and emails, many of which contain attachments relating to the meeting of 6th June 2019 (Keith Gordon) and the meeting of 12th June 2019 (Lord Forsyth of Drumlean), and that you believe that the effort required to review, assess and extract that information would be considerable and would require a disproportionate level of staff effort. I repeat an extract from the Information Commissioner's Office guidance on section 14(1): (40) "Public authorities must keep in mind that meeting their underlying commitment to transparency and openness may involve absorbing a certain level of disruption and annoyance." However, I would like to further assist HM Treasury by (at least) halving the burden which is claimed as falling on the authority, thereby helping you to meet that important commitment to transparency and openness. Please therefore provide: - all briefings/documents (received from HMT and/or HMRC) - all minutes of such meetings - all follow-up correspondence to/from HMT and/or HMRC officials - all memoranda (for file and/or as sent to other individuals including any retained drafts) from Mr Norman or members of his office for this single meeting only: 6th June 2019: Keith Gordon As you have already successfully located and identified this information as part of my previous (unsuccessful) request, I feel confident that you will be able to respond to this new and revised request well before any statutory deadline is reached.”

“Any person making a request for information to a public authority is entitled – (a) to be informed in writing by the public authority whether it holds information of the description specified in the request, and (b) if that is the case to have that information communicated to him.”

“21. The factual focus of this appeal is on the information recorded in an invoice or receipt. Applying the ordinary use of the English language to the term information in this context, I take that to be a reference to all aspects of the invoice that informed the viewer when looking at the invoice… 22 It is to me also trite to note that the wording on a typical receipt or invoice is only part of what a recipient sees when looking at it. Typically there will be verbal and numerical content to be read and understood, but there will also be visual content to be seen, rather than read, but which may also require to be understood for the recipient to have appreciated the whole of the experience, if I may term it that, communicated by the receipt or invoice. … 27. I cannot see how full information about a receipt or invoice that contains trademarks can be conveyed if the trademark material is not reproduced in the trademarked form so confirming (or not confirming) that unique identity. And equally I accept the argument that the presence of that trademarked material in a document is information recorded in the document. In my view that must be a matter of law, not fact.”

“34. A central position in the argument before us was occupied by the opinion of the court, given by Lord Reed, in Glasgow City Council v Dundee City Council [2009] CSIH 73. This was a decision of the Inner House of the Court of Session on two appeals under the Freedom of Information (Scotland) Act 2002. One of those appeals concerned emails from a firm of solicitors stating that, on behalf of a client, the firm “would like to (and hereby does) make an Information Request that we be provided with a copy of [a specified document or documents]” held by Glasgow City Council. The original requests related to a number of statutory registers, notices and orders, but the matter came down to 28 categories of notice. The Council’s response to the requests was to the effect that all the information requested was available for purchase in the form of Property Enquiry Certificates (“PECs”) under the Council’s publication scheme. The Council was evidently concerned that the request under the 2002 Act was an attempt to circumvent the charging regime it had established by way of PECs. The Commissioner decided, however, that the Council had not dealt with the requests in accordance with Part I of the Act. 35. In considering the appeal against that decision, Lord Reed stated at paragraph 42 of the opinion that the first question was whether the emails were requests for information within the meaning of the Act. He continued: “43. As we have noted, section 1(1) of the Act creates an entitlement to be given information; and section 73 defines ‘information’, for the purposes of section 1, as meaning ‘information recorded in any form’. That terminology, which reflects that of the Freedom of Information Act 2000, was carefully chosen: most earlier freedom of information legislation in other jurisdictions confers a right of access to documents (as in the Commonwealth of Australia Freedom of Information Act 1982) or to records (as in the Canadian Access to Information Act 1982, the Irish Freedom of Information Act 1997 and the United States Freedom of Information Act 1966); and the New Zealand Official Information Act 1982, which requires ‘official information’ to be made available on request, is not restricted to recorded information. The word ‘information’ is itself of wide range, as has been emphasised by courts construing the New Zealand and Australian legislation (as, for example, in Commissioner of Police v Ombudsman [1988] 1 NZLR 385, R v Harvey [1991] 1 NZLR 242 and Kwok v Minister for Immigration and Multicultural Affairs [2001] FCA 1444). The definition in section 73 is therefore wide in scope, but it is not unlimited. In the first place, it does not include unrecorded information. Secondly, it is implicit in the definition that a distinction is drawn between the record itself and the information which is recorded in it. That is consistent with section 11(2)(c), which implies that ‘information’ is capable of being contained in a record. The distinction is also reflected in section 65(1) of the Act, which, as we have explained, makes it an offence to alter a record with the intention of preventing the disclosure of information. What a person can request, in terms of section 1(1), is the information which has been recorded, rather than the record itself. The right conferred by section 1, where it applies, is therefore to be given the information, rather than a particular record (or a copy of the record) that contains it. Put shortly, the Act provides a right of access to information, not documentation.” 36. The correctness of that statement of principle is common ground before us, and it is acknowledged in particular that there is a conceptual distinction between the record and the information contained in it and that the statutory entitlement relates specifically to the latter. The point is made by Mr Hopkins on behalf of the Commissioner, however, that there will be cases (of which the present case is said to be one) where it is necessary in practice to disclose the record itself, whether by providing a copy of it or by providing an opportunity to inspect it, in order to communicate the entirety of the information contained in it. The fact that disclosure of the record may be necessary in order to give effect to the entitlement to the information does not undermine the conceptual distinction between the record and the information and does not confuse the statutory entitlement to recorded information with an entitlement to the record … 39. In this case, by contrast with the Glasgow City Council case, the Commissioner interpreted the request not as a request for copies of the invoices rather than for the information contained in them, but as a request “for all of the recorded information contained within the three receipts/invoices” (paragraph 17 of his decision); and his reasoning in relation to the provision of copies was simply that there had been a shortfall in the information communicated and that IPSA needed to provide him with copies of the documents in order to remedy the shortfall and communicate all the recorded information to which Mr Leapman was entitled. Nor is it suggested that the Commissioner ought to have interpreted the request differently, as a request for copies of the documents rather than for the information contained in them: the only point taken as regards the interpretation of the request is IPSA’s contention, considered and rejected later in this judgment, that it ought to have been interpreted as expressing a preference for an opportunity to inspect the originals… paragraphs 45-48 of the opinion are addressed to arguments that are not advanced in this case, including in particular the argument that a record of information is itself information. Thus it was that Mr Hopkins, for the Commissioner, did not take issue with Lord Reed’s analysis but submitted, in my view correctly, that it did not assist on the specific question with which we are concerned in this appeal. … 46. …There may be cases, as here, where the available means of communication are limited by the need to disclose a document itself in order to communicate all the information recorded in it.” “43. As we have noted, section 1(1) of the Act creates an entitlement to be given information; and section 73 defines ‘information’, for the purposes of section 1, as meaning ‘information recorded in any form’. That terminology, which reflects that of the Freedom of Information Act 2000, was carefully chosen: most earlier freedom of information legislation in other jurisdictions confers a right of access to documents (as in the Commonwealth of Australia Freedom of Information Act 1982) or to records (as in the Canadian Access to Information Act 1982, the Irish Freedom of Information Act 1997 and the United States Freedom of Information Act 1966); and the New Zealand Official Information Act 1982, which requires ‘official information’ to be made available on request, is not restricted to recorded information. The word ‘information’ is itself of wide range, as has been emphasised by courts construing the New Zealand and Australian legislation (as, for example, in Commissioner of Police v Ombudsman [1988] 1 NZLR 385, R v Harvey [1991] 1 NZLR 242 and Kwok v Minister for Immigration and Multicultural Affairs [2001] FCA 1444). The definition in section 73 is therefore wide in scope, but it is not unlimited. In the first place, it does not include unrecorded information. Secondly, it is implicit in the definition that a distinction is drawn between the record itself and the information which is recorded in it. That is consistent with section 11(2)(c), which implies that ‘information’ is capable of being contained in a record. The distinction is also reflected in section 65(1) of the Act, which, as we have explained, makes it an offence to alter a record with the intention of preventing the disclosure of information. What a person can request, in terms of section 1(1), is the information which has been recorded, rather than the record itself. The right conferred by section 1, where it applies, is therefore to be given the information, rather than a particular record (or a copy of the record) that contains it. Put shortly, the Act provides a right of access to information, not documentation.”

“- all briefings/documents (received from HMT and/or HMRC) - all minutes of such meetings - all follow-up correspondence to/from HMT and/or HMRC officials - all memoranda (for file and/or as sent to other individuals including any retained drafts) from Mr Norman or members of his office.”

“Freedom of Information is one of the pillars upon which open government operates. The Government is committed to supporting the effective operation of the Freedom of Information Act.”