Newcastle United Football Company Ltd v Commissioners for HM Revenue & Customs
| Jurisdiction | England & Wales |
| Judge | Lord Justice Singh |
| Judgment Date | 29 November 2023 |
| Neutral Citation | [2023] EWHC 3021 (Admin) |
| Court | King's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/2890/2022 |
[2023] EWHC 3021 (Admin)
Lord Justice Singh
and
Mr Justice Garnham
Case No: CO/2890/2022
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
DIVISIONAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Cairns Nelson KC and Tom Godfrey (instructed by RPC LLP) for the Appellant
Andrew Bird KC (instructed by HMRC Legal Services) for the Respondents
Hearing date: 19 October 2023
Approved Judgment
This judgment was handed down remotely at 10 a.m. on 29 November 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
This is the judgment of the Court on an appeal by way of case stated from the Crown Court at Kingston upon Thames (HH Judge Shetty or “the Judge”).
At the hearing we heard submissions from Mr Cairns Nelson KC, who appeared with Mr Tom Godfrey for the Appellant, and from Mr Andrew Bird KC, who appeared for the Respondents. We are grateful to them and their teams for their written and oral submissions.
Factual background
On 15 April 2014 HMRC (the Respondents) advised the Appellant that they were conducting a civil enquiry into agents' fees in accordance with Code of Practice 8 (the “Agent Fees Enquiry”).
On 20 April 2017, in the course of a criminal investigation into the Appellant's tax affairs, the Crown Court at Leeds granted warrants authorising officers of the Respondents to enter and search the Appellant's premises in Newcastle upon Tyne under para 12 of Schedule 1 to the Police and Criminal Evidence Act 1984 (“PACE”).
On 26 April 2017, the Respondents executed the search warrants. Due to the volume of material, the Respondents used powers under sections 50 and 51 of the Criminal Justice and Police Act 2001 (“CJPA”) to seize both hard copy and digital records where there were reasonable grounds for believing that they might fall within the remit of the warrants (“the Seized Material”).
On 17 January 2018, the Respondents issued Notices of VAT Assessments to the Appellant in the sum of £2,034,802 for the VAT quarters commencing 1 February 2011 to 1 October 2016 with interest which continues to accrue (“the VAT Proceedings”).
On 29 January 2018, the Respondents made a claim in the County Court Money Claims Centre against the Appellant regarding Class 1 National Insurance Contributions for the tax years ending 19 April 2012 to 19 April 2017, in the sum of £4,250,714.01 (that sum being inclusive of interest to 19 January 2018), plus a £10,000 Court fee and legal costs (“the NIC Proceedings”). Interest continues to accrue at a daily rate of £318.20. The claim is currently stayed.
On 11 May 2018, in the VAT Proceedings, the Appellant appealed against the Respondents' VAT assessments to the First-tier Tribunal (Tax Chamber) (“The FTT”).
In a decision dated 4 January 2019, the Crown Court at Blackfriars ordered the Respondents to review the Seized Material under section 53(3) of the CJPA to determine whether each document fell within the scope of the warrants, and whether legal professional privilege applied under that provision (“the Relevance Review”).
The Relevance Review took place between March 2019 and July 2020, giving rise to over 9,350 items in dispute between the parties.
On 6 May 2021, the Respondents wrote to the Appellant to confirm that the criminal investigation into the Appellant's tax affairs was closed, but that the investigation still indicated “tax non-compliance of a serious nature”. Accordingly, the Respondents confirmed that “the matter will now be referred to colleagues elsewhere within the Fraud Investigation Service” and, further, that the Appellant's related “…appeals against the assessments to Income Tax, National Insurance Contributions and VAT [which] are currently stayed by the First Tier Tribunal” will also be “dealt with under the banner of civil investigation”.
To assist in the civil investigation, the Respondents confirmed that they would return all hard copy material, but would retain digital copies of material that is “thought potentially relevant to any tax irregularity and therefore the civil assessment and collection of tax (i.e. potential civil investigation)” and share it with colleagues responsible for any civil investigation pursuant to section 17 of the Commissioners for Revenue and Customs Act 2005 (“CRCA”).
On 21 July 2021, the Appellant made an application to the Crown Court at Kingston upon Thames under section 59(2) and/or (5) of the CJPA for the return of the retained material. As all hard copy documents and electronic storage devices had been returned to the Appellant, the application related to the retained digital copies of the material that did not attract a claim of legal professional privilege (“the Copy Documents”).
In a judgment dated 18 January 2022, handed down on 8 February 2022, the Judge refused the Appellant's application. In an order dated 11 February 2022 he ordered as follows:
(1) The Respondents are to prepare and deliver a Schedule identifying all the copies of documents that their criminal investigation team have determined should be shared with their civil investigation team (para 7).
(2) The Appellant then has 14 days to identify and put forward reasons as to which documents they consider should not be shared with the Respondent's civil investigation team to which the Respondents then have 14 days to respond (paras 8 to 9).
(3) Absent an agreement between the parties, the Appellant is also entitled to apply to the Court to determine whether the Copy Documents or any of them should be shared (para 10).
On 28 February 2022, the Appellant applied to the Crown Court to state a case for the opinion of the High Court pursuant to section 28 of the Senior Courts Act 1981.
On 16 March 2022, the Respondents wrote to the Court agreeing that it was appropriate that such an application be granted and adding a further three questions to be asked of the High Court on the appeal.
On 5 April 2022, the Judge agreed to state the case, and the Case Stated dated 22 July 2022 was served on the parties on 25 July 2022.
On 26 May 2022, in the VAT Proceedings, the Respondents made a specific disclosure application to the FTT. At the hearing we were informed by Mr Nelson that, on 16 October 2023, three days before the hearing before us, the FTT granted the application by HMRC for disclosure of a range of documents including those relevant to this appeal. In that sense therefore the appeal has become academic but it nevertheless raises important issues of principle for both parties.
On 4 August 2022, the Appellant submitted their notice and grounds of appeal, but in error this was submitted to the Court of Appeal and not the High Court. The Appellant correctly submitted the notice and grounds of appeal to the High Court on 5 August 2022, and applied for an extension of time on 8 August 2022.
On 19 August 2022, the Respondents filed a Respondents' Notice which included a cross-appeal regarding paras 7 to 11 of the Order below, which imposed conditions on their retention and use of the Copy Documents as summarised above.
Material legislation
The key provision in PACE is section 22(1), which provides:
“(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 the circumstances.”
Section 22(2) to (4) provide as follows:
“(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 a trial for an offence; or
(ii) for forensic examination or for investigation in connection with an offence; and
(b) anything may be retained in order to establish its lawful owner, where there are reasonable grounds for believing that it has been obtained in consequence of the commission of an offence.
(3) Nothing seized on the ground that it may be used–
(a) to cause physical injury to any person;
(b) to damage property;
(c) to interfere with evidence, or
(d) to assist in escape from police detention or lawful custody,
may be retained when the person from whom it was seized is no longer in police detention or the custody of a court or is in the custody of a court but has been released on bail.
(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.”
Schedule 1 to PACE concerns “special procedure” material. This requires the warrant of a judge of the Crown Court. The search warrant that was granted by the Crown Court at Leeds on 20 April 2017 was issued under para 12 of Schedule 1 to PACE.
The underlying power which was used to seize material in this case was that contained in para 13 of Schedule 1 to PACE:
“A constable may seize and retain anything for which a search has been authorised under paragraph 12 above.”
It is clear from the terms of section 21(5) of PACE that a constable may photograph or copy, or have photographed or copied, anything which he has power to seize without a request being made under subsection (4) of that section. There can, accordingly, be no question but that the copies made in the present case were made with lawful power to do so.
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