Case 99232

Request for access to records relating to Y Partnership and the individual partners - whether a right of access arises to records created before the commencement of the FOI Act - section 6(5)(b) - whether records are exempt on the grounds that they attract legal professional privilege - section 22(1)(a) - whether release of records could reasonably be expected to prejudice the effectiveness of other Revenue investigations currently in progress - section 21(1)(a) - whether release of records could reasonably be expected to prejudice or impair the enforcement or, compliance with, or administration of the tax laws - section 23(1)(a)(ii) - public interest - whether records release of records could reasonably be expected to prejudice or impair the fairness of proceedings before the Appeal Commissioners - section 23(1)(a)(iv)

Case Summary

Facts

The requester sought access to records relating to the audit of Y Partnership and the formation of an opinion by the Revenue Commissioners under section 811 of the Taxes Consolidation Act 1997 ("the TCA"). The Revenue released a number of records (or portions of records). The remaining records were grouped by the Commissioner into four categories.

Decision

In respect of Group One (which were internal Revenue documents created before the commencement of the FOI Act), the Commissioner considered whether a right of access arose to those records under sections 6(5)(a) or (b) of the FOI Act. In regard to section 6(5)(a), which provides for a right of access to pre-commencement records if access is necessary or expedient in order to understand records created after the commencement of the FOI Act, the Commissioner said that he took this section not to be directed at the question of whether a record can be understood, in a literal sense, without reference to earlier records, but at whether its substance (or gist or subject matter) can be understood. He said that the fact that a document does not contain all the information a reader might wish it to contain does not meant that its substance cannot be understood. The Commissioner said he was unaware of any records, created after the commencement of the Act, in respect of which it could be said that access to this group of records was necessary or expedient in order to understand them.

With regard to section 6(5)(b), which turns on the question of whether the records relate to personal information about the requesters, he noted that two of the records contained internal deliberations of the Revenue on how to handle particular types of cases. In his view, they did not relate to information about Y Partnership and, in particular, they did not relate to information required for the purpose of assessing the tax liability of the partners. The other two records related to information about individuals other than the partners. Thus, the Commissioner found no right of access applied to this group of records under either section 6(5)(a) or (b) of the FOI Act and that he did not need to consider further any other exemptions that the Revenue had applied to these records.

The Commissioner then considered the Revenue's application of section 22(1)(a) to the Group Two records. He quoted from a previous decision where he commented that he considered legal professional privilege to cover two separate matters. He considers that the first limb of the rule covers confidential communications between lawyer and client (which would include the seeking and giving of legal advice) and that the second limb of the rule covers documents "prepared in contemplation of litigation apprehended or threatened provided the dominant purpose of the communication or the coming into existence of the document was in preparation for litigation, apprehended or threatened".

He noted that the Revenue issued opinions under section 811 TCA 1997 in November 1998 and the tax payers appealed against those opinions on 4 December 1998. The Commissioner accepted that, from that point, proceedings before, firstly, the Appeal Commissioners and, in due course, the Circuit Court and possibly the higher Courts, could have been fairly regarded as having been apprehended or threatened. He had been advised that, in applying the rule on legal professional privilege, litigation encompasses not alone court proceedings but also proceedings before tribunals exercising judicial functions, such as the Appeal Commissioners.

He was satisfied that the dominant purpose for the creation of some of these records was preparation for the threatened appeal to the Appeal Commissioners and that further records related to the seeking or giving of legal advice. He was satisfied that the remaining records contained or summarised that legal advice. He found that the Revenue was entitled to refuse access to these records in accordance with section 22(1)(a).

The records in Group Three had been refused firstly on the grounds that section 21(1)(a) applied, which provides for the refusal of a request for access to a record if its release could reasonably be expected to "prejudice the effectiveness of tests, examinations, investigations, inquiries or audits conducted by or on behalf of the public body concerned or the procedures or methods employed for the conduct thereof. The Commissioner commented that, in arriving at a decision to claim a section 21 exemption, "a decision maker must firstly identify the potential harm to the functions covered by the exemption that might arise from disclosure and having identified that harm, consider the reasonableness of any expectation that the harm will occur". The Revenue identified the harm from release of these records as prejudice to the effectiveness of other investigations currently in progress. It accepted that the investigation in relation to Y Partnership had concluded, but said that it was currently engaged in the investigation of about 100 other partnerships involving broadly similar tax arrangements. The Commissioner accepted its evidence on this point.

The Commissioner said it was sufficient for the Revenue to show that release of the records could be reasonably expected to prejudice the effectiveness of particular investigations still in progress, and that its expectations are justifiable in the sense that there are adequate grounds for the expectations. He commented that he does not have to be satisfied that such an outcome will definitely occur. The Commissioner commented that the material in the records would be of significant assistance to taxpayers subject to similar investigations, allowing them to predict the likely trend of Revenue enquiries and to prepare themselves in advance to deal with such enquiries. He was satisfied that putting such taxpayers in this advantageous position could reasonably be expected to prejudice the effectiveness of the investigations involving them and that the Revenue was justified in refusing access to these records in accordance with section 21(1)(a).

In respect of the claim for exemption for these records under section 23(1)(a)(ii), the Revenue pointed out that this section of the FOI Act makes a clear distinction between enforcement, compliance and administration. It said that, if the effectiveness of one of its key enforcement mechanisms (i.e. investigations) were to be prejudiced then enforcement itself would be prejudiced; compliance would be prejudiced because, if taxpayers were allowed unhindered access to an investigator's working papers, they would be less inclined to voluntarily disclose infringements of the tax code; reduced compliance would, in turn, prejudice or impair administration by diverting resources to enforcement which might have been better employed elsewhere. The Commissioner accepted this was the case.

The exceptions at section 23(3) did not apply to the records, and thus, the Commissioner was not required to consider the public interest. However, he considered the argument, made by the requester, that the public interest required disclosure of the records on the basis that the subjects of proceedings should be aware of allegations against them in order to allow them to rebut such allegations and that the activities of the Revenue, in carrying out its functions under the tax laws, should be open and transparent.

The Commissioner noted that section 811(6)(a) TCA 1997 required the notice of opinion issued under that section to contain particular details which would be considered before the Appeal Commissioners. He was satisfied that the matters in question had been advised to the requester(s) in the notices issued to them. He commented that there is a public interest in public bodies conducting their business in an open and transparent manner. He noted that the particular investigation to which Y Partnership was a party had concluded and, generally, in cases such as this where a public body has carried out an investigation and has taken action or where it has decided that no further action is warranted following such an investigation, the bias normally moves in favour of release of the record. However, having regard to the harm identified by the Revenue as reasonably expected to occur in relation to investigations still in progress, and to the evidence presented by the Revenue as to the nature and extent of such investigations, the Commissioner was satisfied that the public interest at this time would be, on balance, better served by not releasing these records.

With respect to the Group Four records, the Revenue relied on section 23(1)(a)(iv), which provides that a request for access to a record may be refused if such release could reasonably be expected "to prejudice or impair the fairness of criminal proceedings in a court or of civil proceedings in a court or other tribunal". It identified the harm which could arise from disclosure of the contents of one of these records, (which discussed grounds, other than section 811, on which the Revenue might have challenged the arrangements entered into by Y Partnership), as being the prejudice to future hearings if other similar cases, pursued on these grounds rather than under section 811, are appealed. The Commissioner did not accept that the Revenue's reasons for taking one course of action in one case and a different course of action in another were not matters which the Appeal Commissioners should properly have regard to in deciding cases never them. He did not accept that it was reasonable to expect, in the circumstances outlined by Revenue, that disclosure of this paragraph would prejudice or impair the fairness of the hearing of any future appeal. He directed the release of this record.

With regard to the other record in this category, which the Revenue argued related to arguments which might be made in presenting its case before the Appeal Commissioners, and that disclosure of the Revenue's consideration of these matters, or the implications that were drawn from such matters, would alert the taxpayers to possible lines of cross-examination and allow them to prepare a response. It is argued that, in those circumstances, the fairness of the proceedings before the Appeal Commissioners could reasonably be expected to be prejudiced or impaired.

The Commissioner noted that the record at issue was not prepared in order to assist the Revenue in the conduct of its case before the Appeal Commissioners but was instead a report prepared by the Inspector at the end of an audit of the tax affairs of the Y Partnership in order to assist in considering whether to form an opinion under section 811. The Commissioner said that he was not satisfied that, generally speaking, disclosure of a record which does no more than indicate why the Revenue raised an assessment or formed an opinion could reasonably be expected to prejudice the fairness of subsequent appeal hearings. He was also not satisfied that disclosure of such a record could, again generally speaking, reasonably be expected to prejudice or impair the enforcement of, compliance with or administration of the tax laws.

The Commissioner commented that the administration of the tax laws may be enhanced by ensuring that tax payers know the reasons why the Revenue does not agree with their returns as filed. The Commissioner commented that his use of the phrase "generally speaking" encompassed a situation that might arise where a record might disclose why the Revenue raised an assessment or formed an opinion, as well as containing material the disclosure of which could reasonably be expected to prejudice the fairness of subsequent proceedings. Such a record might rehearse detailed arguments (including legal arguments) for use in any subsequent appeal, or the Revenue's views on the truthfulness of replies given to its tax officers in the course of an investigation. In respect of the latter, the Commissioner commented that, while such matters can reasonably be expected to arise in the course of cross examination at a future appeal hearing, it seemed to him that allowing the tax payer access in advance of his/her oral evidence to the Revenue's detailed assessment of, and reaction to, the replies already given, could reasonably be expected to prejudice or impair the fairness of the proceedings at that hearing.

However, in relation to the records at issue the Commissioner found that the Revenue had not justified its reliance on section 23(1(a)(iv) in refusing access.

Date of Decision: 14.12.2000

Our Reference: 99232

14.12.2000

Mr X

Dear Mr X

I refer to your application on behalf of Y Partnership and to those of each of the individual partners for a review of the decision of the Office of the Revenue Commissioners ("the Revenue") to refuse access to records relating to Y Partnership and each of the individual partners. The records in question relate to the audit of Y Partnership and the formation of an opinion by the Revenue under section 811 of the Taxes Consolidation Act, 1997 ("the TCA"). I understand that you are acting on behalf of each individual in relation to their reviews.

Background

I have now completed my review of the Revenue's decision. In arriving at my decision I have had regard to the following matters:

• the correspondence between you and the Revenue in relation to your request,
• your letter of application seeking a review of the Revenue's decision and the various written submissions which you made to my Office, and
• the written submission from the Revenue and oral submissions made at two meetings with members of my staff.

My findings and decision are set out below.

Scope of Review

In the course of the review the Revenue reconsidered its position and agreed to release a number of records to which it refused access in the original decisions. I understand that these records have been made available to you.

You also raised a number of queries regarding the records considered by the Revenue in making its decision on your request. Ms Ivory has addressed these points in her letter of 22 November 1999. I do not propose, therefore, to consider these particular matters further in this decision, other than to say that I am satisfied that the Revenue has disclosed to me, in the course of this review, all of the records encompassed in your original request.

Therefore, the only matter before me for consideration is whether or not the Revenue is entitled to refuse access to the remainder of the records, in full or in part, in accordance with the provisions of the Freedom of Information Act, 1997 ("the FOI Act").

For the purposes of identifying these records, I have adopted the numbering used by the Revenue in the schedules prepared by the Office of the Chief Inspector of Taxes (CIT) and the Revenue Solicitor respectively and which have been provided to you and, for convenience, I have grouped them as follows:

Group 1

This group consists of records numbered 4B, 4C, 4N, 4O in the schedule prepared by the CIT.

Group 2

This group consists of :

• the records detailed on the schedule of records held by the Revenue Solicitor, numbered 1,4,7 (copy of 4), 8, 9, 10, 11 (attachment to 1), 12, 13, and 14, and
• the records numbered in the CIT schedule as 3C/4F/5F/6E (part of paragraph 3.3), Appendix 4 of record 3C/4F/5F/6E and records 5G, 6B-6D, 6G, 6H and 6K

Group 3

This group consists of the records numbered 2B, part of 2D, 4A, 4H, 4J, 4K, 4L, 4M, 5D and part of Appendix 1 of 3C/4F/5F/6E on the schedule of the CIT.

Group 4

Paragraphs 4 and part of paragraph 5.5 of 3C/4F/5F/6E on the schedule of CIT.

Findings

Group 1

The records in this Group (4B, 4C, 4N, 4O) are internal Revenue documents. The Revenue refused access to them on the basis of section 21(1)(a), section 23(1)(a)(ii), section 23(1)(a)(iv) and section 28(1). However, as these records were all created before the commencement of the Act, i.e. before 21 April 1998, I must consider whether there is a right of access to these records under the FOI Act, before any consideration of the application of these exemptions to these records.

The FOI Act normally only applies to records created after 21 April 1998. Public bodies are only required to grant access to records created prior to the commencement of the Act if access is necessary or expedient in order to understand records created after commencement (section 6(5)(a)) or if the records relate to personal information about the person seeking access to them (section 6(5)(b)).

In my decision in the case of Mr ABE and the Department of Marine and Natural Resources (decision number 98117) I explained how section 6(5)(a) should be applied. I said that, in my view, the section is directed not at the question of whether a record can be understood in a literal sense without reference to earlier records but at whether its substance (or gist or subject matter) can be understood. I made it clear that the fact that a document does not contain all the information which a reader might wish to have does not mean that the substance of a document cannot be understood. I also said that the word "expedient" meant "fit, proper or suitable to the circumstances of the case". I found that the release of a pre-commencement record is justified only to the extent that such access is a suitable means to achieving the end of understanding the substance of the post-commencement record.

I have examined these records in the light of my interpretation of section 6(5)(a) as explained above. I am not aware of any records created after the commencement of the Act in respect of which it could be said that access to the present records is necessary or expedient in order to understand them.

The possible application of section 6(5)(b) turns on the question of whether the records relate to personal information about the requesters.

Section 2 of the Act defines "personal information" for the purposes of the Act as follows: ""personal information" means information about an identifiable individual that

(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 a public body on the understanding that it would be treated by it as confidential".

The section goes on to detail twelve specific instances of information which is personal. Of these, paragraph (ix) of the definition of 'personal information' is most relevant to this case. This provides that, without prejudice to the generality of the above definition, personal information includes "information required for the purpose of assessing the liability of the individual in respect of a tax or a duty owed or payable to the State or to a local authority, a health board or other public body or for the purpose of collecting an amount due from the individual in respect of such a tax or duty or other payment".

I find that records 4B and 4C contain internal deliberations of the Revenue on how to handle particular types of cases. In my view, they do not relate to information about Y Partnership and, in particular, they do not relate to information required for the purpose of assessing the tax liability of the Y Partnership.

Records 4N and 4O relate to information about individuals other than the Y Partnership.

I find that none of the four records relate to personal information about any of the requesters in this case. I find that neither section 6(5)(a) nor 6(5)(b) applies to these four records and that there is no right of access to these records.

Having found that there is no right of access to these records under the FOI Act, I am not required to consider further the application of the exemptions claimed by the Revenue in respect of these records.

Group 2

The records in this Group (1,4,7, 8, 9, 10, 11, 12, 13, 14, part of paragraph 3.3 of record 3C/4F/5F/6E, Appendix 4 of record 3C/4F/5F/6E, and records 5G, 6B-6D, 6G, 6H and 6K) consist of correspondence between the CIT and the Revenue Solicitors and internal Revenue documents. The Revenue claims that these documents would be exempt from production in proceedings in a court on the ground of legal professional privilege and that, accordingly, they are exempt by virtue of section 22(1)(a).

As I noted in case number 99017, Mr ABN and the Office of the Revenue Commissioners "The scope of legal professional privilege covers two separate matters. The first limb of the rule covers confidential communications between lawyer and client (which would include the seeking and giving of legal advice). The second limb of the rule covers documents prepared in contemplation of litigation apprehended or threatened provided the dominant purpose of the communication or the coming into existence of the document was in preparation for litigation, apprehended or threatened".

Turning to the facts of the present case, I note that the Revenue issued opinions under section 811 TCA 1997 in November 1998 and the tax payers appealed against those opinions on 4 December 1998. It seems to me that, at that point, proceedings, first before the Appeal Commissioners, and, in due course before the Circuit Court and possibly the higher courts, can fairly be regarded as having been apprehended or threatened. I am advised that in applying the rule on legal professional privilege, litigation encompasses not alone court proceedings but also proceedings before tribunals exercising judicial functions, such as the Appeal Commissioners.

I note that the records 6B-6D, 6G, 6H and 6K were clearly created well after the appeals were lodged. I have carefully considered the contents of these records. They are documents which passed between various Revenue officials in preparation for the hearing before the Appeal Commissioners. These communications do not contain legal advice. However, I am satisfied that the dominant purpose in creating them was preparation for the threatened appeal to the Appeal Commissioners. In the circumstances, I am satisfied that section 22(1)(a) applies to all of these records.

I have carefully considered the contents of the records numbered 1, 4, 7, 8, 9,10,11, 12, 13, 14, in the Revenue Solicitors' schedule and record 5G. I am satisfied that they relate to the seeking or the giving of legal advice. I am satisfied that the part of paragraph 3.3 which is still at issue and Appendix 4 of records 3C/4F/5F/6E both contain or summarise that legal advice. I am satisfied that all of these records would be exempt from production in proceedings in a court on the ground of legal professional privilege. I find that the Revenue was entitled to refuse access to them in accordance with section 22(1)(a).

Group 3

This group consists of the records numbered 2B, part of 2D, 4A, 4H, 4J, 4K, 4L, 4M, 5D and part of Appendix 1 of 3C/4F/5F/6E. The Revenue has refused access to these records, in full or in part, relying on both section 21(1)(a) and section 23(1)(a)(ii).

Section 21(1)(a

Section 21(1)(a) provides that "(1) A head may refuse to grant a request under section 7 if access to the record concerned could, in the opinion of the head, reasonably be expected to (a) prejudice the effectiveness of tests, examinations, investigations, inquiries or audits conducted by or on behalf of the public body concerned or the procedures or methods employed for the conduct thereof".

In the case of The Sunday Times Newspaper & Others and the Department of Education and Science (decision number 98104), I explained my approach to interpreting the words "could...reasonably be expected to...." in the context of section 21 of the Act. Having reviewed the case law dealing with the interpretation of this phrase in the context of Freedom of Information legislation in other jurisdictions, I concluded that "some care is needed in relying on the dicta which I have just quoted because in the Cockcroft case the majority warned against the dangers of paraphrasing the words under discussion. Nevertheless, it seems to me that the dicta are useful in highlighting that the test is not concerned with the question of probabilities or possibilities. It is concerned with whether or not the decision maker's expectation is reasonable.

It seems to me that in arriving at a decision to claim a section 21 exemption, a decision maker must firstly identify the potential harm to the functions covered by the exemption that might arise from disclosure and having identified that harm, consider the reasonableness of any expectation that the harm will occur".

In this case the Revenue has identified the harm as prejudice to the effectiveness of other investigations currently in progress. It accepted that the investigation in relation to Y Partnership has concluded but said that it is currently engaged in the investigation of about 100 other partnerships involving broadly similar tax arrangements. I accept its evidence on this point.

For the Revenue to succeed in its arguments, I have to be satisfied that granting access to these records could reasonably be expected to prejudice the effectiveness of particular investigations still in progress. I do not have to be satisfied that such an outcome will definitely occur. It is sufficient for the Revenue to show that it expects such an outcome and that its expectations are justifiable in the sense that there are adequate grounds for the expectations. These records contain information which show how the Revenue carried out its investigations in the case of the Y Partnership, strategies for carrying out its enquiries and internal discussions or observations on the outcome of such enquiries and the identification of potential courses of action. It seems to me that material of this kind would be of significant assistance to taxpayers subject to similar investigations, allowing them to predict the likely trend of Revenue enquiries and to prepare themselves in advance to deal with such enquiries. I am satisfied that putting such taxpayers in this advantageous position could reasonably be expected to prejudice the effectiveness of the investigations involving them. Therefore, I find that the Revenue is justified in refusing access to these records in accordance with section 21(1)(a).

Section 23(1)(a)(ii)

Section 23(1)(a)(ii) provides that "A head may refuse to grant a request under section 7 if access to the record concerned could, in the opinion of the head, reasonably be expected to- (a) prejudice or impair- (i) ................ (ii) the enforcement of, compliance with or administration of any law.."

I have already explained how I interpret the phrase "could...reasonably be expected to..." in the context of section 21(1)(a) and the approach which I have adopted is equally applicable to section 23(1)(a). The Revenue pointed out that this subsection makes a clear distinction between enforcement, compliance and administration. It said that tax law is enforced in a number of ways, including the carrying out of audits and investigations. Compliance involves taxpayers filing correct tax returns, on time. Administration involves informing taxpayers of their obligations and putting in place procedures to facilitate taxpayers who comply. Due to limited resources, the Revenue can only enforce the law in a relatively small number of cases. In most cases, it relies on voluntary compliance with the tax laws. Essentially, its argument is that if the effectiveness of one of its key enforcement mechanisms were to be prejudiced then enforcement itself would be prejudiced; compliance would be prejudiced because, if taxpayers were allowed unhindered access to an investigator's working papers, they would be less inclined to voluntarily disclose infringements of the tax code; reduced compliance would, in turn, prejudice or impair administration by diverting resources to enforcement which might have been better employed elsewhere.

It seems to me that some of the Revenue's arguments in relation to section 21(1)(a) and section 23(1)(a)(ii) are interdependent. I have already accepted that disclosure could reasonably be expected to prejudice the effectiveness of a large number of other investigations which the Revenue currently has in hand. For the same reasons, I accept that disclosure could reasonably be expected to prejudice the enforcement of, compliance with and administration of the tax laws.

Having found that section 23(1)(a)(ii) applies I am required to consider whether any of the exceptions at section 23(3) apply to these records. Section 23(3) provides that access to a record may be granted in specified circumstances where the public interest would, on balance, be better served by granting than by refusing to grant the request. Those circumstances are where the record discloses that an investigation is not authorised by law or contravenes any law, or it contains information concerning the performance of a public body of functions relating to law enforcement or contains information concerning the effectiveness or merits of any programme for prevention, detection or investigation of breaches of the law. No such record exists in this case and I am satisfied that section 23(3) does not apply.

The public interest

Having found that the Revenue is justified in relying on section 23(1)(a)(ii), it is not strictly necessary for me to consider the application of the public interest test contained in section 21(2) to these records. However, I note that you have argued that the public interest favours disclosure of these records on the basis that individuals or companies, the subject of proceedings, should be aware of allegations against them in order to allow them to rebut such allegations and that the activities of the Revenue, in carrying out its functions under the tax laws, should be open and transparent.

As regards the argument that you should be made aware of allegations against you in order to allow you to rebut them, I note that section 811(6)(a) requires the notice of opinion issued under that section to specify the transaction(s) which in the opinion of Revenue are tax avoidance transaction(s), the tax advantage to be denied to the person to whom the notice is given, and the tax consequences of the transaction insofar as they relate to the person. I am satisfied that the matters which are to be considered before the Appeal Commissioners have been advised to you in the notices issued to you.

As a general proposition, I agree that there is a public interest in public bodies conducting their business in an open and transparent manner. However, there are limits to such openness in the case of investigations, which the FOI Act recognises. As I noted in case number 98086 - Messrs. AAU and the Department of Agriculture and Food "As a general proposition I would accept that an investigator must be allowed a fair degree of latitude, subject to the need for fair procedures, to decide when information already in his or her possession should be made available to a party which is the subject of the investigation. If a party subject to investigation by a public body has a right to be fully informed at all times of the state of knowledge of the investigating authority, then it would appear to be inevitable that this would impair the investigation of offences".

The particular investigation to which Y Partnership was a party has concluded and, generally, in cases such as this where a public body has carried out an investigation and has taken action or where it has decided that no further action is warranted following such an investigation, the bias normally moves in favour of release of the record. However, having regard to the harm identified by the Revenue as reasonably expected to occur in relation to investigations still in progress, and to the evidence presented by the Revenue as to the nature and extent of such investigations, I am satisfied that the public interest at this time would be, on balance, better served by not releasing these records.

Group 4

The Revenue has refused access to paragraph 4 and part of paragraph 5.5 of 3C/4F/5F/6E on the basis that disclosure of these parts of the record could reasonably be expected to prejudice or impair the fairness of proceedings before the Appeal Commissioners. In respect of paragraph 4 it argued that disclosure could prejudice possible future proceedings before the Appeal Commissioners in other cases as opposed to proceedings currently in progress in the case of Y Partnership.

Section 23(1)(a)(iv) provides that "A head may refuse to grant a request under section 7 if access to the record concerned could, in the opinion of the head, reasonably be expected to� (a) prejudice or impair� (i) ........... (iv) the fairness of criminal proceedings in a court or of civil proceedings in a court or other tribunal,........".

I have outlined above in my discussion of the application of section 21(1)(a) and 23(1)(a)(ii) the approach to be taken in the application of this exemption i.e. "a decision maker must firstly identify the potential harm to the functions covered by the exemption that might arise from disclosure and having identified that harm, consider the reasonableness of any expectation that the harm will occur".

Paragraph 4

I am constrained from discussing the contents of this paragraph in any detail and from giving a full explanation of my decision by the requirement of the Act to take all reasonable precautions to prevent the disclosure of information contained in exempt records. However, it is sufficient for me to note that this paragraph discusses grounds, other than section 811, on which the Revenue might have challenged the arrangements entered into by Y Partnership. The potential harm which the Revenue has identified as arising from the disclosure of this paragraph is that disclosure could prejudice future hearings if other similar cases, pursued on these grounds rather than under section 811, are appealed. The essence of the Revenue's case here is that the fact that being seen, as it were, to shift ground is a matter which could be used by other appellants to embarrass it before the Appeal Commissioners and to influence them against the Revenue's case.

However, it seems to me that the approach taken by the Revenue in other cases or its reasons for adopting one course of action in one case and a different course of action in another are not matters which the Appeal Commissioners should properly have regard to in deciding cases before them. I am not persuaded that it is reasonable to expect, in the circumstances outlined by the Revenue, that disclosure of this paragraph would prejudice or impair the fairness of the hearing of any future appeal. I find that the Revenue has not justified its reliance on section 23(1)(a)(iv) in refusing access to this part of record 3C/4F/5F/6E.

Paragraph 5.5

The only parts of paragraph 5.5 which the Revenue is not willing to release are the third bullet point of subparagraph 5.5(iv) and the whole of subparagraphs 5.5(v) and 5.5(vi). Once again, I am constrained from discussing the contents of this paragraph in any detail and from giving a full explanation of my decision by the requirement of the Act to take all reasonable precautions to prevent the disclosure of information contained in exempt records. It is sufficient for me to say that the Revenue argued that these parts of the record relate to arguments which might be made in presenting its case before the Appeal Commissioners and that disclosure of the Revenue's consideration of these matters, or the implications that were drawn from such matters, would alert the taxpayers to possible lines of cross-examination and allow them to prepare a response. It is argued that, in those circumstances, the fairness of the proceedings before the Appeal Commissioners could reasonably be expected to be prejudiced or impaired.

In case number 98102 - Mr and Mrs ABJ and the Office of the Revenue Commissioners, having noted that the records considered in that case appeared to contain notes made by one or more Revenue officials for use by them in conducting their case before the Appeal Commissioners, I concluded that "As a general point, I would accept that the release of such material is likely to prejudice the fairness of future appeal proceedings. The Revenue has made the point that the Appeal Commissioner proceedings are conducted orally. Neither side is obliged to disclose its position fully in advance. It seems to me that the imposition of a requirement on the Revenue to disclose its proposed conduct of a case in advance without a corresponding requirement in the case of the appellant would, in many cases, impair the fairness of the proceedings".

I should note that the record at issue was not prepared in order to assist the Revenue in the conduct of its case before the Appeal Commissioners. In fact, it is a report prepared by the Inspector at the end of an audit of the tax affairs of Y Partnership. The report was submitted to Ms Moore and is clearly intended to assist her in considering whether to form an opinion under section 811. These particular paragraphs address specific aspects of the case which appeared to the Inspector who wrote the report to be relevant to the question of whether the transactions concerned were undertaken primarily for reasons other than to give rise to a tax advantage. Ms Moore subsequently formed the opinion which the report advised her to form. There appears to be no record on the file to indicate the precise basis on which the opinion was formed. However, it is reasonable to assume that the contents of this record were of considerable influence.

I am not satisfied that, generally speaking, disclosure of a record which does no more than indicate why the Revenue raised an assessment or formed an opinion could reasonably be expected to prejudice the fairness of subsequent appeal proceedings. Nor am I satisfied that the disclosure of such a record could, again generally speaking, reasonably be expected to prejudice or impair the enforcement of, compliance with or administration of the tax laws. Indeed, the opposite may well be true i.e. that the administration of the tax laws may be enhanced by ensuring that taxpayers know the reasons why the Revenue does not agree with their returns as filed. I say generally speaking because it is possible to envisage a record which, while disclosing why the Revenue raised an assessment or formed an opinion, might also contain material the disclosure of which could reasonably be expected to prejudice the fairness of subsequent proceedings. For example, such a record might also rehearse detailed arguments, including legal arguments, for use in any subsequent appeal. Disclosure of such arguments could, in my view, reasonably be expected to prejudice the fairness of a subsequent appeal hearing. The only legal arguments contained in the record at issue are those in Appendix 4 and I have already decided that these are covered by legal professional privilege.

Such a record might also contain the Revenue's detailed views on the truthfulness of replies given to its officers by taxpayers in the course of an investigation. Where such matters can reasonably be expected to arise in the course of cross examination at a future appeal hearing, it seems to me that allowing the taxpayer access in advance of his/her oral evidence to the Revenue's detailed assessment of and reaction to the replies already given, could reasonably be expected to prejudice or impair the fairness of the proceedings at that hearing. I note that the only such material contained in the record at issue is part of Appendix 1, which I have already decided is exempt by virtue of section 21(1)(a) and section 23(1)(a)(ii).

Having examined the record at issue in this case, I am not satisfied that disclosure of the material in paragraph 5.5 could reasonably be expected to prejudice the fairness of the proceedings before the Appeal Commissioners. Therefore, I find that the Revenue has not justified its reliance on section 23(1)(a)(iv) in refusing access to this part of record 3C/4F/5F/6E.

Decision

Having carried out a review under section 34(2) of the FOI Act, I vary the decision of the Revenue insofar as it relates to paragraphs 4 and 5 of record 3C/4F/5F/6E and I find that access should be granted to these paragraphs in full.

A party to a review, or any other person affected by a decision of the Information Commissioner following a review, may appeal to the High Court on a point of law arising from that decision. Such an appeal must be initiated not later than four weeks from the date of this letter.

Yours sincerely

Information Commissioner