A Consultation on Tax Management: Analysis of Responses

8. TREATMENT OF TAXPAYER INFORMATION

Background

8.1 It is proposed that Revenue Scotland handles the personal information it receives with care, with any disclosure having to be authorised and taxpayer information protected and shared only for defined purposes.

8.2 The consultation asked:

Question 31: What are your views on the proposed statutory provision forbidding disclosure of information held by Revenue Scotland? Should there be criminal sanctions if information is disclosed?

8.3 Nineteen respondents (68% of all respondents) addressed this question.

Table 33: Respondents to Question 31

Category	No.	%
Tax accountants and professional tax bodies	8	42
Public bodies	2	11
Legal professional bodies	3	16
Local authority bodies	3	16
Business	3	16
Total	19	100

NB Percentages may not total 100% exactly due to rounding.

8.4 The proposed statutory provision forbidding disclosure of information held by Revenue Scotland was supported by all of the respondents who addressed this question. Two respondents (LA, Leg) indicated explicitly their preference for this approach over what they perceived to be the more open regimes, with respect to disclosure of information, operating in countries such as Norway and Sweden.

8.5 One respondent (Tax) recommended that it should be made clear who has the power to authorise any information sharing and who has accountability for such decisions. One public body also called for clear guidance on what information can or cannot be published when an organisation holds the same or similar information as Revenue Scotland, but for different reasons. For example, SEPA publishes information on companies and individuals who may also become Landfill taxpayers.

8.7 A local authority commented that the consultation makes no mention of the Data Protection Act and Revenue Scotland's role as data controller.

8.8 A suggestion was made (Leg) that perhaps the police should require a warrant if they wish to obtain confidential information from Revenue Scotland, in the same way that Revenue Scotland has to seek permission from a Sheriff to obtain information in cases of suspected fraud.

8.9 Nine respondents expressed their support for the proposal that there should be criminal sanctions if information is disclosed.

Information sharing

8.10 Revenue Scotland will need to handle with due care the confidential information it receives. However, it will be appropriate in specific circumstances for information to be shared by Revenue Scotland with other public bodies in Scotland or the rest of the UK. It is proposed that sharing should be permissible:

• to help in assessing or collecting taxes or other charges etc payable to a public body; and
• to help to prevent or detect suspected crime or the apprehension or prosecution of offenders.

8.11 The consultation asked:

Question 32: Do you agree that Revenue Scotland should be empowered to share information with other public bodies and other tax authorities internationally for the purposes outlined? Do you think there are other purposes for which information should be shared? Should such sharing be governed by some kind of formal agreement, and if so what form should that agreement take?

8.12 Twenty four respondents (86% of all respondents) addressed this question, making it the most frequently answered question in the consultation.

Table 34: Respondents to Question 32

Category	No.	%
Tax accountants and professional tax bodies	8	33
Public bodies	4	17
Legal professional bodies	5	21
Local authority bodies	4	17
Business	3	12
Total	24	100

Views on whether Revenue Scotland should be empowered to share information with other public bodies

8.13 All respondents agreed that Revenue Scotland should be empowered to share information with other public bodies and other tax authorities according to agreed strict protocol and safeguards. Purposes for sharing information were proposed:

• with local authorities to assist with the collection of council tax and non-domestic rates (LA, LA, LA)
• in connection with an earnings arrestment (both Sheriff Officer respondents called for the enactment of Part 16 of the Bankruptcy and Diligence etc (Scotland) Act 2007 in this regard)
• in connection with the National Fraud Initiative (LA, LA, PB), one respondent remarked, "to include the NFI would send a clear signal about the Government's intention to minimise fraud" (Audit Scotland).
• with HMRC for tax compliance and anti-avoidance efforts (Bus, Tax)
• with Audit Scotland who should have the same access to taxpayer information that the National Audit Office has for HMRC information (PB)
• for benefit payment assessments by the Department of Work and Pensions (LA, Bus)
• with other tax authorities internationally in the light of EU directives (Tax, Bus)
• with other public bodies including the Office of the Scottish Charity Regulator in dealing with the investigation of actual or suspected crime or misconduct in relation to charities (PB).

8.14 The Guidelines for a Better Implementation of the Existing Council of Europe's Recommendation on Enforcement were referred to by the two Sheriff Officer respondents, who requested that Scotland introduces similar guidelines encouraging the speedy access to information on a defendant's assets for enforcement agents.

8.15 Clarification was requested on what constitutes "public interest" in relation to Revenue Scotland sharing information with other tax authorities (Tax, Bus).

Views on whether sharing information should be governed by some kind of formal agreement

8.16 There was general agreement that it would be beneficial for a formal agreement to govern protocol on sharing information. Three respondents emphasised that any such agreement should be in the public domain (Tax, Tax, LA), perhaps set out in Information Sharing Agreements (LA). Making this publicly available was seen as helping taxpayers to understand when the sharing of their information can be challenged (Tax, Bus).

8.17 Safeguards governing information sharing were viewed as essential aspects of any formal agreement. Such safeguards were envisaged as including tests to be used in determining whether the power to share information can be exercised (Leg); protocol for considering the sharing of historical taxpayer information (Tax); the binding by the rules (such as confidentiality) of bodies with delegated powers such as SEPA and RoS (Tax); who can give authorisation for disclosure of information (Tax); what information can be shared (LA); and the purposes for which the information can be used (LA).

Whistle-blowing

8.18 There is already a framework in Scotland (the Public Interest Disclosure Act 1998 and the Civil Service Code) that covers public interest disclosure on "whistle-blowing" and sets out what a public official should do if they suspect that there is wrongdoing. The Scottish Government believes that this works well and proposes that this framework should apply to Revenue Scotland also.

8.19 The consultation asked:

Question 33: Do you agree that the existing framework for public interest disclosure is sufficient for Revenue Scotland?

8.20 Seventeen respondents (61% of all respondents) addressed this question.

Table 35: Respondents to Question 33

Category	No.	%
Tax accountants and professional tax bodies	7	41
Public bodies	2	12
Legal professional bodies	3	18
Local authority bodies	3	18
Business	2	12
Total	17	100

NB Percentages may not total 100% exactly due to rounding.

8.21 All of the respondents who addressed this question agreed that the existing framework for public interest disclosure, as described, is sufficient for Revenue Scotland. It was felt that this would be consistent with the rest of the public sector (LA, Bus); and should be communicated widely (LA). Two respondents (Tax, Bus) cautioned that the arrangements should not extend to disclosure of specific taxpayer details. A call was made for guidance on what is deemed to be in the "public interest" (LA).

Freedom of information

8.22 HMRC, as the UK tax authority, is able under the UK Freedom of Information Act 2000 to refuse to release information sought under the Act when that would identify or could be used to identify a taxpayer. If Revenue Scotland were to be subject to similar taxpayer confidentiality obligations as HMRC then it would seem reasonable for there to be a similar type of exemption from the Freedom of Information (Scotland) act 2002 (FOISA).

8.23 The consultation asked:

Question 34: Do you agree that certain information held by Revenue Scotland and bodies to which it has delegated powers should be exempt from Freedom of Information legislation in order to prevent disclosure of information that would identify or could be used to identify a taxpayer?

8.24 Eighteen respondents (64% of all respondents) addressed this question.

Table 36: Respondents to Question 34

Category	No.	%
Tax accountants and professional tax bodies	8	44
Public bodies	3	17
Legal professional bodies	2	11
Local authority bodies	3	17
Business	2	11
Total	18	100

8.25 Of the 18 respondents who addressed this question, 15 agreed that certain information held by Revenue Scotland and bodies to which it has delegated powers should be exempt from Freedom of Information legislation to prevent disclosure of information that would indemnify or could be used to identify a taxpayer.

8.26 Two further respondents (Tax, LA) recommended that there should not be blanket exemptions, but cases should be reviewed individually, on their own merits. The final respondent (LA) considered that if Revenue Scotland is brought within the ambit of FOISA, exemptions are already in place in the Act which would allow requests for such information to be refused.

8.27 SEPA provided general agreement, but highlighted that consideration will need to be given to information that SEPA already holds and publishes.