Whether Revenue was justified in refusing access to two records referred to as investigative material, under sections 35 and 41 of the FOI Act.

30 January 2020

Background

The applicant is a company which operates in Ireland and has a sister company which operates in the United Kingdom. In a request to Revenue dated 31 January 2019, it sought access to all correspondence relating to the company for the period of 2014 to 2019, including and not restricted to any correspondence with the UK Tax Authorities. In a decision dated 26 February 2019, Revenue granted access to fifty five records and refused access to two records, described as investigative material, under section 35(1)(a) of the FOI Act which is concerned with the protection of information given to a public body in confidence.

The applicant sought an internal review of that decision on 6 March 2019, following which Revenue affirmed its original decision. In its internal review decision, Revenue stated that both refused records relate to requests for information made to another EU Member State under Council Regulation (EU) No. 904/2010 on administrative cooperation and combating fraud in the field of value added tax. On 2 August 2019, the applicant-�s solicitors sought a review by this Office of Revenue-�s decision.

The records at issue each comprise two parts, namely details of the request for information and details of the information received. During the course of the review, Revenue clarified that it was no longer seeking to rely on section 35(1)(a) in respect of those parts of the records consisting of requests for information. Instead it sought to rely on section 41(1)(a) to refuse access to the entirety of the records at issue, and section 35(1)(a) only in respect of the information received. Mr O-�Gorman of this Office informed the applicant of the potential relevance of section 41 and sought a submission from it. The applicant-�s solicitors made a submission on the matter on 12 November 2019.

I have now completed my review of Revenue-�s decision. In carrying out my review, I have had regard to the correspondence between the applicant and Revenue as set out above and to the correspondence between this Office and both Revenue and the applicant on the matter. I have also had regard to the provisions of Council Regulation (EU) No 904/2010.

Scope of Review

This review is concerned solely with whether Revenue was justified in refusing to grant access to the two records relating to the applicant described as investigative material under sections 35(1)(a) and 41(1)(a) of the FOI Act.

Preliminary Matters

Although I am obliged to give reasons for my decision, section 25(3) of the FOI Act requires me to take all reasonable precautions in the course of a review to prevent disclosure of information contained in an exempt record. This means that the extent to which I can describe the contents of the records or give reasons for my decision is limited. Secondly, section 13(4) of the Act provides that in deciding whether to grant or refuse a request, any reason that the requester gives for the request shall be disregarded. This means that I cannot have regard to the applicant's motives for seeking access to the information in question, except in so far as those motives reflect what might be regarded as public interest factors in favour of release of the information where the Act requires a consideration of the public interest.

Analysis and Findings

As section 41(1)(a) seems to me to be the more relevant exemption in this case, I will consider its applicability first. The section requires a public body to refuse to grant a request if the disclosure of the record sought is prohibited by law of the European Union or any enactment (other than a provision specified in the Third Schedule to the FOI Act). In effect, such a non-disclosure provision overrides any right of access under FOI, unless the particular provision is set out in the Third Schedule. Section 41(1)(a) is not subject to a public interest override.

Council Regulation (EU) No 904/2010 (the Regulation) is concerned with "administrative cooperation and combating fraud in the field of value added tax." Article 1 provides that the Regulation -�lays down rules and procedures to enable competent authorities of the Member States to cooperate and to exchange with each other any information that may help to effect a correct assessment of VAT, monitor the correct application of VAT, particularly on intra-Community transactions, and combat VAT fraud.-�

Article 7 provides, among other things, that -�at the request of the requesting authority, the requested authority shall communicate the information referred to in Article 1, including any information relating to a specific case or cases.-�

Articles 51-56 set out the conditions governing the exchange of information. Article 55(1) provides as follows:

-�Information communicated or collected in any form pursuant to this Regulation -� shall be covered by the obligation of official secrecy and enjoy the protection extended to similar information under both the national law of the Member State which received it and the corresponding provisions applicable to Union authorities. Such information shall be used only in the circumstances provided for in this Regulation.

Such information may be used for the purpose of establishing the assessment base or the collection or administrative control of tax for the purpose of establishing the assessment base.

The information may also be used for the assessment of other levies, duties, and taxes covered by Article 2 of Council Directive 2008/55/EC of 26 May 2008 on mutual assistance for the recovery of claims relating to certain levies, duties, taxes and other measures.

In addition, it may be used in connection with judicial proceedings that may involve penalties, initiated as a result of infringements of tax law without prejudice to the general rules and legal provisions governing the rights of defendants and witnesses in such proceedings.-�

Article 55(3) provides;

-�By way of derogation from paragraph 1, the competent authority of the Member State providing the information shall permit its use for other purposes in the Member State of the requesting authority, if, under the legislation of the Member State of the requested authority, the information can be used for similar purposes.-�

It is Revenue-�s position that Article 55 of the Regulation prohibits the release of the entirety of the information contained in the two records at issue, and therefore access to the records must be refused under section 41(1)(a) of the FOI Act. Revenue-�s submission to this Office indicated that two information requests were made under Article 7 of the Regulation and answered by a Member State competent authority via the formal process. Revenue also indicated that the competent authority in question did not consent to release of the records.

In its submissions to this Office, the applicant argued that article 55(1) of the Regulation merely requires Ireland to impose the same obligation of official secrecy and the protection which is extended to similar information under Irish law and the corresponding provisions applicable to Union authorities. It argued that if the Regulation was intended to create an obligation of official secrecy over and above national provisions, it would include an express statement to that effect. It argued that Revenue had not identified any national provision of official secrecy which applies.

The applicant further argued that it terms of restrictions on the use of the information communicated or collected, the Regulation does not affect the right of access under the FOI Act. It argued that the usage restriction is intended to limit the use of the information by the receiving authority to the purposes set out in the Regulation and it argued that the disclosure of the information to it does not constitute use of the information in that context.

In my view, Article 55 must be considered in the overall context of the Regulation. As I have outlined above, the Regulation is concerned with administrative cooperation between Member States and combating fraud in the field of value added tax. Among other things, it sets out the various ways in which information is exchanged between Member States and the procedures for making enquiries.

Article 55 provides that information communicated or collected in any form pursuant to the Regulation shall be used only in the circumstances provided for in the Regulation. Article 55 goes on to set out the purposes for which the information may be used, namely;

• for the purpose of establishing the assessment base or the collection or administrative control of tax for the purpose of establishing the assessment base,
• for the assessment of other levies, duties, and taxes covered by Article 2 of Council Directive 2008/55/EC of 26 May 2008 on mutual assistance for the recovery of claims relating to certain levies, duties, taxes and other measures, and
• in connection with judicial proceedings that may involve penalties, initiated as a result of infringements of tax law without prejudice to the general rules and legal provisions governing the rights of defendants and witnesses in such proceedings.

While I am constrained by section 25(3) from giving more detailed reasons, I am satisfied that the entirety of the information in the records at issue comprises information communicated or collected pursuant to the Regulation. I am also satisfied that the disclosure of the information to the applicant would be contrary to the requirement in Article 55 that it shall be used only in the circumstances provided for in the Regulation.

The Regulation also provides for information to be used for other purposes, but only with the consent of the competent authority of the requested Member State. As mentioned above, the competent authority in question has not given such consent. Accordingly, I accept that disclosure of the requested records is prohibited by Article 55 of the Regulation, a law of the European Union.

Although the reference to the Third Schedule in section 41 may only be in the context of Irish law, for the sake of completeness I note that Article 55 of the Regulation is not listed in the Third Schedule to the FOI Act. In the circumstances, I find that the requested records are exempt from release under section 41(1)(a) of the FOI Act.

Having carried out a review under section 22(2) of the FOI Act, I hereby affirm Revenue-�s refusal to fully grant the applicant's request under section 41(1)(a), on the basis that release of the two records marked investigative material is prohibited by law of the European Union, specifically Article 55 of European Council Regulation No 904/2010.

Right of Appeal

Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision.  In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.

Stephen Rafferty

Senior Investigator