Whether Revenue was justified in refusing to grant access to certain records created during an audit into the applicant’s tax affairs

15 April 2020

Background

On 3 July 2019, the applicant made an FOI request to Revenue for access to complete copies of the files in respect of its 1990, 1994 and 2008 audits into his tax affairs. In its decision of 9 September 2019, Revenue identified 337 records that fall within the scope of the request. It granted access to 271 records and it refused access to the remaining records in full or in part under sections 30, 31, 35 and 37 of the FOI Act. The applicant requested an internal review of Revenue's decision. In its internal review decision of 30 September 2019, Revenue varied its original decision and released additional information contained in 21 records; it also relied on additional exemption provisions in relation to two of the records.

On 16 October 2019, the applicant applied to this Office for a review of Revenue’s decision. In his application, the applicant referred to a letter dated 13 August 2019 from Revenue to his Solicitors which stated: “The Revenue Commissioners are in possession of the files relating to your client’s audit in the 1990’s. There is no question of those documents being destroyed. Your clients and, indeed yourselves are aware from previous correspondence in 2015/2016, 2018 and also earlier this year that Revenue is objecting to the release of certain records. Your client has been provided with a copy of the audit file but some documents were not copied on the copy file and those are in the possession of Revenue. Those are the documents to which Revenue are objecting to disclosure and release. The matter is now the subject of a Freedom of Information application by your client. That process will proceed in the normal way.”

In his submissions to this Office, the applicant stated that the documents that he is interested in are those which Revenue removed from the file relating to his audit in the 1990’s. The applicant said he would to like to know whether Revenue provided those documents to this Office for the purposes of the review and he would like this Office to review Revenue’s decision to refuse access to these documents.

Following the applicant’s submissions, this Office wrote to Revenue and asked it to confirm whether the records referred to in its letter of 13 August 2019 were included amongst the records provided to this Office for the purpose of the review. In reply, Revenue stated that the records in question are record numbers 327 to 335. It stated that these records were scheduled in both its decision letter and its internal review letter and were provided to the Commissioner for the purposes of the review. Revenue said it refused access to these records under sections 30, 35 or 37 of the Act.

This Office provided the applicant with an outline of Revenue’s position and the applicant confirmed that he was agreeable to limiting the scope of this review to Revenue’s decision to refuse access to records 327 to 335.

I have decided to conclude this review by way of a formal binding decision. In conducting this review, I have had regard to correspondence between the applicant and Revenue, to correspondence between the applicant and this Office, to correspondence between Revenue and this Office, to the contents of the records at issue and to the provisions of the FOI Act.

Scope of the Review

This review is concerned solely with the question of whether Revenue was justified in refusing access to records 327 to 335 under sections 30(1)(a), 35(1) or 37(1) of the FOI Act.

Preliminary Matters

Section 13(4) of the FOI Act provides that the actual or perceived reasons for a request must generally be disregarded by the decision maker, including the Information Commissioner, (except insofar as such reasons are relevant to consideration of the public interest or other provisions of the Act).

Section 18 of the Act provides for the deletion of exempt information and the granting of access to a copy of a record with such exempt information removed. This should be done where it is practicable to do so and where the copy of the record thus created would not be misleading. However, the Commissioner takes the view that neither the definition of a record nor the provisions of section 18 envisage or require the extracting of particular sentences or occasional paragraphs from records for the purpose of granting access to those particular sentences or paragraphs. Generally speaking, therefore, the Commissioner is not in favour of the cutting or "dissecting" of records to such an extent.

Although I am obliged to give reasons for my decision, section 25(3) requires all reasonable precautions to be taken in the course of a review to prevent disclosure of information contained in an exempt record. This means that the description which I can give of the records at issue and the material that I can refer to in the analysis is limited.

Analysis and Findings

Section 11(4) Pre-commencement Records

Section 11(4) provides that a right of access under the FOI Act does not normally arise in the case of records created before the commencement date of the Act (21 April 1998). Section 11(5) of the Act provides two separate grounds on which (subject to other provisions of the FOI Act) a right of access to pre-commencement records arises. These two grounds are (a) access to records created before the commencement of this Act is necessary or expedient in order to understand records created after such commencement, or (b) records created before such commencement relate to personal information about the person seeking access to them. Records 327 to 335 were created between 1990 and 1997. I am satisfied that they relate to personal information about the applicant and therefore there is a potential right of access to these records.

Section 35 - Confidential Information

Revenue refused access to records 328-331 and 333-335 on the basis that they are exempt under sections 30(1)(a) and 35(1)(a) of the FOI Act. As section 35 is a mandatory exemption provision, I will consider it first.

Section 35 provides that:

(1) Subject to this section, a head shall refuse to grant an FOI request if—

(a) the record concerned contains information given to an FOI body, in confidence and on the understanding that it would be treated by it as confidential (including such information as aforesaid that a person was required by law, or could have been required by the body pursuant to law, to give to the body) and, in the opinion of the head, its disclosure would be likely to prejudice the giving to the body of further similar information from the same person or other persons and it is of importance to the body that such further similar information as aforesaid should continue to be given to the body, or

(b) disclosure of the information concerned would constitute a breach of a duty of confidence provided for by a provision of an agreement or enactment (other than a provision specified in column (3) in Part 1 or 2 of Schedule 3 of an enactment specified in that Schedule) or otherwise by law.

(2) Subsection (1) shall not apply to a record which is prepared by a head or any other person (being a director, or member of the staff of, an FOI body or a service provider) in the course of the performance of his or her functions unless disclosure of the information concerned would constitute a breach of a duty of confidence that is provided for by an agreement or statute or otherwise by law and is owed to a person other than an FOI body or head or a director, or member of the staff of, an FOI body or of such a service provider.

(3) Subject to section 38, subsection (1)(a) shall not apply in relation to a case in which, in the opinion of the head concerned, the public interest would, on balance, be better served by granting than by refusing to grant the FOI request concerned.”

Revenue relied on section 35(1)(a) of the Act in refusing access to records 328-331 and 333-335. However, in its submissions to this Office, Revenue stated that these records were prepared by Revenue Officials in the course of the performance of their functions. My examination of the records confirms this. I am satisfied, therefore, that the records fall within section 35(2) of the FOI Act unless the exception in the second part of that provision applies.  I am, therefore, required to consider whether release of these records would constitute a breach of a duty of confidence that is provided for by agreement or statute or otherwise by law and is owed to a person other than an FOI body.

In its submissions to this Office, Revenue states that records 328-331 and 333-335 contain information provided in confidence by a third party which is not an FOI body. Revenue states that the third party provided this information on the basis that it would be treated as confidential. Revenue provided information in its submissions that I cannot disclose here on the circumstances of its receipt of information from an identifiable third party. According to Revenue, while it may be known that it receives information through various instruments, the content and extent of the detailed information given would not be in the public domain.

Having regard to the content of the records, it seems to me that it is appropriate to consider whether their release would result in a breach of a duty of confidence provided for otherwise by law. A duty of confidence provided for "otherwise by law" is generally accepted to include a duty of confidence arising in equity. In considering whether or not an equitable duty of confidence exists, this Office has regard to the three elements of what are generally known as the Coco test (Coco v A.N. Clark (Engineers) Ltd [1969] R.P.C. 41):

"First, the information itself ... must 'have the necessary quality of confidence about it'. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it.”

In order to establish that an equitable duty of confidence exists, it should be shown that the information has the necessary ‘quality of confidence’. Factors relevant for consideration in this regard include, for example, whether the information is confidential or secret or concerns private matters. In this case, the information was provided for the limited purpose of a Revenue audit into the applicant’s tax affairs. The information is not in the public domain and would be known to very few people. I am satisfied that the information concerns private or secret matters and has the necessary quality of confidence about it.

The circumstances in which the information is communicated must be such that a duty or obligation of confidence is imposed. Relevant matters for consideration in this regard may include, for example, whether there were any assurances of confidentiality; the expectations of the parties and the reasonableness of any such expectations. There are references in the records themselves which support the position that there was a mutual expectation of confidence in the circumstances of this case. Revenue states that the information in the records is kept in the strictest of confidence and it has a duty of care to the third party to keep their identity and the information received confidential. I am satisfied that both the third party and Revenue had an expectation that the information would be treated in confidence and I am satisfied that this expectation was, in the circumstances, reasonable.

Where disclosure of the information would result in an unauthorised use to the detriment of the party who communicated it or where it is wrongfully communicated by the person receiving it or by another person who is aware of the obligation of confidence, the third requirement of establishing breach of an equitable duty of confidence is met. In Case 090077 (Mr. X and the Department of Tourism Sport and Recreation) the Commissioner stated that he understood that "detriment" could arise simply where the relevant information is disclosed (which, under FOI, is equivalent to publication of the material concerned to the world at large) without the consent of the party to whom it relates. Thus, I accept that release of the records at issue would result in detriment to the third party.

I am satisfied that Revenue owes an equitable duty of confidence to the third party. Therefore, while Revenue relied on section 35(1)(a) in refusing access to records 328-331 and 333-335; in my view section 35(1)(b) is the more appropriate exemption. I find that records 328-331 and 333-335 are exempt under section 35(1)(b).

The Public Interest

Section 35(1)(b) is not subject to the general public interest balancing test in section 35(3). However, it is established that the action for breach of confidence is itself subject to a public interest defence.

The Commissioner has acknowledged that the public interest grounds which may justify or excuse a breach of a duty of confidence are quite narrow and include, for example, the revelation of wrongdoing or danger to the public. I do not consider these to be relevant here given the content of the records.

In summary, I find that to release records 328-331 and 333-335 would result in a breach of an equitable duty of confidence owed to the third party concerned. I find that section 35(2) does not apply, and I find that the records are exempt under section 35(1)(b) of the FOI Act. As a result of this finding, it is not necessary for me to consider section 30(1)(a) of the Act in relation to these records.

Section 37 - Personal Information 

In its internal review decision, Revenue relied on sections 30 and 37 of the Act in refusing access to record 327. As section 37 is a mandatory exemption provision, I will consider this provision first.

Section 37(1)

Section 37(1) of the FOI Act provides that an FOI body shall refuse a request if access to the record concerned would involve the disclosure of personal information. Section 2 of the Act defines "personal information" as information about an identifiable individual that, either - (a) would, in the ordinary course of events, be known only to the individual or members of the family, or friends, of the individual, or (b) is held by an FOI body on the understanding that it would be treated by that body as confidential.

Section 2 of Act details fourteen specific categories of information that is personal without prejudice to the generality of the foregoing definition. These categories include (ii) information relating to the financial affairs of the individual, (ix) a number, letter, symbol, word, mark or other thing assigned to the individual by an FOI body for the purpose of identification or any mark or other thing used for that purpose, (xi) information required for the purpose of assessing the liability of the individual in respect of a tax or duty or other payment owed or payable to the State or to a local authority, the Health Service Executive or other FOI body, or for the purpose of collecting an amount due from the individual in respect of such a tax or duty or other payment, (xii) the name of the individual where it appears with other personal information relating to the individual or where the disclosure of the name would, or would be likely to, establish that any personal information held by the FOI body concerned relates to the individual.

Record 327 is an internal Revenue memo which concerns tax compliance in a named locality. This record contains the names of certain individuals, including the applicant, and the registration numbers assigned to these individuals by Revenue for the purposes of identification. According to Revenue, only one tax registration number is assigned to a taxpayer and an individual is identifiable by their tax registration number. I am satisfied that the names and the tax registration numbers of the third parties comprises the personal information of the individuals concerned.

Record 327 also contains a small amount of information which does not include the names or tax registration numbers of individuals. However, this information refers to compliance and payment issues in a named locality at a certain time. It seems to me that release of this information could identify the individuals referred to elsewhere in the record. Having regard to section 18 of the Act, I consider that releasing the applicant’s name and tax registration number in isolation would result in a misleading copy of the record. I find, therefore, that record 327 is exempt from release on the basis of section 37(1) subject to section 37(2) and section 37(5) which I examine below.

Section 37(2)

There are some circumstances, provided for at section 37(2) of the FOI Act, in which the exemption at section 37(1) does not apply. I am satisfied that none of the circumstances identified at section 37(2) (a), (b), (c), (d), or (e) arise in this case.

Section 37(5) The Public Interest

Section 37(5) provides that access to the personal information of a third party may be granted where (a) the public interest that the request should be granted outweighs the right to privacy of the individual to whom the information relates, or (b) the grant of the request would benefit the

person to whom the information relates. It has not been argued that releasing the records would benefit the persons to whom the information relates and I am satisfied that section 37(5)(b) does not apply in the circumstances.

In relation to paragraph (a), I must consider whether the public interest in granting the request outweighs, on balance, the public interest in protecting the right of privacy of the individuals to whom the information relates. The FOI Act itself recognises the public interest in ensuring the transparency and accountability of public bodies. On the other hand, however, the language of section 37 and the Long Title to the FOI Act recognise a very strong public interest in protecting the right to privacy, which has a Constitutional dimension, as one of the un-enumerated personal rights under the Constitution. Accordingly, when considering section 37(5)(a), privacy rights will be set aside only where the public interest served by granting the request (and breaching those rights) is sufficiently strong to outweigh the public interest in protecting privacy.

I am not satisfied that, in the circumstances of this case, disclosing names, tax registration numbers and other details of businesses in a named locality would serve to enhance transparency and accountability in relation to Revenue's audit functions. I find, therefore, that section 37(5)(a) does not apply to this records.

Section 30(1)(a) Functions and Negotiations of FOI Bodies

In its internal review decision, Revenue refused access to record 332 on the basis that it is exempt under sections 30(1)(a) and 35(1)(a) of the Act. However, in its submissions to this Office, Revenue stated that due to the passage of time it cannot say if the information contained in record 332 was received in confidence and it is no longer relying on section 35(1)(a) of the Act. Revenue continues to rely on section 30(1)(a) of the Act in support of its decision to refuse access to record 332.

Section 30(1)(a) provides that a head may refuse to grant an FOI request if access to the record concerned could, in the opinion of the head, reasonably be expected to prejudice the effectiveness of tests, examinations, investigations, inquiries or audits conducted by or on behalf of an FOI body or the procedures or methods employed for the conduct thereof. Section 30(2) provides that the exemption does not apply where the public interest would, on balance, be better served by granting than by refusing to grant the FOI request.

When invoking section 30(1)(a), the FOI body should identify the potential harm in relation to the relevant function specified in paragraph (a) that might arise from disclosure and having identified that harm, consider the reasonableness of any expectation that the harm will occur. In examining the merits of an FOI body's view that the harm could reasonably be expected, the Commissioner does not have to be satisfied that such an outcome will definitely occur. It is sufficient for the FOI body to show that it expects an outcome and that its expectations are justifiable in the sense that there are adequate grounds for the expectations.

Revenue argues that release of record 332 would be prejudicial to the conduct and effectiveness of similar audits. It states that release of this record would inform taxpayers of the enquiries and tests that Revenue carries out to gather and verify information. It argues that the release of such information could reasonably be expected to prejudice the effectiveness of future audits conducted by Revenue by revealing its strategy for conducting such audits.

Record 332 is an audit intelligence report form. I am satisfied that it is the type of record envisaged by section 30(1)(a). The next question that I must address is whether release of this record could reasonably be expected to cause the harm envisaged. Record 332 contains information which shows how Revenue carried out its audit of aspects of the applicant’s business, strategies for carrying out its enquiries and internal observations on the outcome of such enquiries. The release of a record under the FOI Act is considered, effectively, as release to the world at large. I am satisfied that this record  contains information which could be of assistance to taxpayers subject to similar audits, allowing them to predict the likely trend of Revenue enquiries and to prepare themselves in advance to deal with such enquiries. This could put such taxpayers in an advantageous position and could reasonably be expected to prejudice the effectiveness of audits involving them. I find, therefore, that record 332 is exempt under section 30(1)(a) of the Act.

Section 30(2) - the Public Interest

The exemption provided for at section 30(1) does not apply where the public interest would, on balance, be better served by granting the request than by refusing it. I must, therefore, go on to consider the public interest test under section 30(2). There is a public interest in FOI bodies operating in an open and transparent manner. However, the Act requires that the public interest in releasing information which might contribute to such openness and transparency must be balanced against the harm which might be occasioned by its release.

It seems to me that the public interest in openness and transparency in the manner in which Revenue performs its functions has been met to a certain extent by the release of many of the records under this request. I do not consider that the public interest in the release of record 332 outweighs, on balance, the public interest in ensuring that Revenue can carry out its functions without prejudice to the effectiveness of its investigations and the audit tools used. I find, therefore, that the public interest would be better served by refusing access to record 332.

Decision

Having carried out a review under section 22(2) of the Freedom of Information Act 2014, I hereby affirm Revenue's decision:

• I find that section 35(1)(b) applies to records 328-331 and 333-335;
• I find that section 37(1) applies to record 327;
• I find that section 30(1)(a) applies to record 332.

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. 

 

 

Elizabeth Dolan

Senior Investigator