On 29 November 2023, the Divisional Court dismissed the appeal (by way of case stated) of Newcastle United Football Company (NUFC) concerning the use of copies of materials seized by HMRC during a criminal investigation into NUFC. The Court allowed HMRC's cross-appeal concerning the terms upon which it had the right to retain and use such copies.
Andrew Bird KC appeared for HMRC in its successful opposition to an appeal to the Divisional Court by Newcastle United Football Club. Judgment was handed down by Lord Justice Singh and Mr Justice Garnham in NUFC v HMRC [2023] EWHC 3021 Admin.
Elisenda Mitchell examines the judgment and the clarification the divisional court offers in respect of the use of copies of material seized under criminal investigation powers.
Background
This judgment comes some 6 years after HMRC successfully opposed NUFC’s Judicial Review challenge to the initial search warrants obtained during HMRC’s criminal investigation (R (Newcastle United Football Company and Others) v Leeds Cr Ct and HMRC [2017] EWHC 2404 (Admin); [2017] 4 WLR 187). In an investigation named “Operation Loom”, HMRC was investigating whether NUFC had claimed inflated VAT refunds and evaded income tax and NI contributions in relation to payments made to and via football agents.
After the criminal investigation by HMRC into NUFC was concluded in May 2021, HMRC maintained that it had a right to retain copies and images of the seized material (but not the originals) under s.17 Commissioners of Revenue and Customs Act 1995. NUFC made an application for all documents and copies to be returned, and this included an application for an order that any digital copies of the material seized should be deleted or returned. The application was made to the Crown Court under s.59 Criminal Justice and Police Act 2001. HHJ Shetty refused the application by NUFC but imposed certain terms and conditions on the use of the copies by HMRC.
Following HHJ Shetty’s decision, NUFC applied to state a case for the opinion of the High Court. HMRC cross-appealed, adding further questions to be asked of the High Court on appeal.
The following five questions were considered:
Appeal by NUFC
- Under section 22 of PACE 1984, do copies or images taken by HMRC of materials seized under a criminal investigation (PACE and CJPA) powers need to be returned or deleted by HMRC where the seized materials have been returned once the criminal investigation has concluded?
- Do the words “so long as is necessary in all the circumstances” in s.22(1) of PACE include the case where HMRC seeks to retain the copies and images for the public (but non-criminal investigation) purposes of HMRC?
- If a power to retain documents under s.22 of PACE lapses with the end of a criminal investigation, does s.22 of PACE restrict or prohibit the use of information in such documents for the purposes of section 17(2) of CRCA 2005?
Cross-appeal by HMRC
- Where documents are seized under a search warrant, once a criminal investigation ends and the right of retention under s.22 of PACE lapses, is the Criminal Investigation team of HMRC entitled to pass copies on to the Civil Investigation team of HMRC by reason of s.17 of CRCA? Is the transfer gateway limited to information contained in documents that HMRC is entitled to retain under s.22 of PACE?
- Where HMRC has a power, conferred by s.17 of CRCA, to use “information” and that information consists, in part, of copies of images or documents seized under criminal investigation (PACE and CJPA) powers, was HHJ Shetty correct in law to impose terms or conditions, using the power to make directions under the CJPA, upon retention under s.17 of those copies or images?
Judgment
Ultimately the questions were centred on three main issues to be decided upon:
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Returning copies of seized materials
On this issue, the Divisional Court concluded that s.22 does not have the effect of requiring the return of copies by the investigator, noting that it would make it very difficult in practice to have a workable rule. If HMRC are allowed to retain their own work product which quoted or copied the information contained in the copy, there is little practical distinction between retention of the copy and retention of the work product. Section 22 is about property rights, and the law protects matters of privacy or confidentiality in a different way. The Court considered a number of authorities, including the common law predecessor of s.22, Ghani v Jones [1971] QB 69 and Marcel v MPC [1992] Ch 225.
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Sharing information within HMRC for non-criminal investigation purposes
It was held that s.17(1) of CRCA permits HMRC to share information which they have obtained for the purpose of a criminal investigation with others within HMRC for their civil tax collection purposes even after the criminal investigation has been concluded, and that this includes the power to retain copies or images of documents so as to use the information contained within them. Section 22 is not a provision that restricts or prohibits the use of information in such documents for the purposes of s.17(2) of CRCA. The Judge was therefore right to conclude that “information” is different from the underlying documents.
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Whether terms and conditions could be imposed on retention under section 17 of CRCA
Once HHJ Shetty had concluded as he did that HMRC had the relevant power to share and use the information under s.17 of the CRCA, he was wrong in law to impose terms or conditions on the exercise of that power. That was not a matter for the Crown Court, having refused the NUFC’s application to it. The Crown Court was functus officio. The result was that no conditions should have been imposed under s.59(5)(c) of the CJPA 2001. HMRC had argued that conditions should not be imposed as a matter of discretion if they would impede the exercise of a statutory right, but the Court preferred the more straightforward functus approach.
Until now, authorities on s.22 of PACE have not dealt with “information” contained in lawfully-seized property as opposed to the property itself - a key issue in this case. The judgment further clarified the interplay between s.22 of PACE and s.17 of CRCA - whether retaining information for assessment and collection of taxes was necessary in all the circumstances - another point where the authorities were previously silent. Finally, the judgment considered the complex provisions of ss 57 and 63 of CJPA and, in upholding HMRC's arguments, observed that these had not been considered in R (Business Energy Solutions Ltd) v Crown Court at Preston [2018] EWHC 1534 (Admin); [2018] 1 WLR 4887
Elisenda Mitchell is a first-six pupil, and began her pupillage with us in October 2023. Elisenda is observing and assisting in various matters across Chambers’ practice areas. Before starting pupillage, Elisenda was a paralegal at Pury Erskine Solicitors where she assisted with a broad range of criminal defence, regulatory and military proceedings. From preparing cases for trial in the Crown Court, she gained considerable experience of cases involving serious violence and sex offences.
Andrew Bird KC is a specialist in white-collar crime, civil and criminal asset forfeiture, and civil and public law proceedings which overlap with the criminal process. Andrew is ranked in Chambers and Partners in the fields of POCA and Asset Forfeiture (Band 1 Silk), Financial Crime and Private Prosecutions - Financial Crime. He is ranked in The Legal 500 in the field of POCA and Asset Forfeiture. He is also recognised in Who's Who Legal at the UK Bar in the fields of Asset Recovery, Civil Fraud, and Criminal Fraud.
