Collateral use by investigating authorities

1. Disputes and investigations giving rise to proceedings in both the criminal and civil jurisdictions are increasingly common. The principles surrounding the disclosure and use in one domestic jurisdiction of material received in another are well-established, albeit their application may be complex and highly fact-specific.
2. The implied undertaking by the recipient of evidence disclosed in civil proceedings, not to use or disclose it for a collateral purpose without the court’s permission, is now largely enshrined in CPR32. Furthermore, section 17 of the Criminal Procedure and Investigations Act 1996 prevents the collateral use by the accused of unused material disclosed to the defence in criminal proceedings without the permission of the court.
3. It is of note that material disclosed to a third party by a prosecuting authority in the course of a criminal investigation but not within the course of the proceedings, is not subject to any prohibition on collateral use by the third party[1].
4. But what about the use of the material, for another purpose, by the investigating authority itself?
5. This is the issue that arose in the context of tax investigations in the recent judgment of the Divisional Court in Newcastle United FC v Revenue and Customs Commissioners [2023] EWHC 3021 (Admin).

Facts

6. In 2017, HMRC obtained warrants from the Crown Court authorising HMRC officers to enter and search Newcastle United FC’s premises in relation to a criminal investigation into the club’s tax affairs. The warrants were granted pursuant to the Police and Criminal Evidence Act 1984 (“PACE”) Schedule 1 paragraph 12.
7. HMRC also used powers under the Criminal Justice and Police Act 2001 (“CJPA”) sections 50 and 51 to seize hard copy and digital records relevant to the investigation.
8. Ultimately the criminal investigation was closed without any charges being brought.
9. However, HMRC concluded that the criminal investigation had revealed “tax non-compliance of a serious nature”, and therefore referred the case to its civil Fraud Investigation Service.
10. At the same time, HMRC indicated that it would return all hard copy material that had been seized in the course of the criminal investigation, but would retain digital copies of any material that was “thought potentially relevant to any tax irregularity and therefore the civil assessment and collection of tax”, and share it with those responsible for any civil investigation pursuant to section 17 of the Commissioners for Revenue and Customs Act 2005 (“CRCA”).
11. Newcastle United FC (“the club”) applied to the Crown Court under section 59(2) and/or section 59(5) of the CJPA for the return of the digital copies of the seized material, in the light of the closure of the criminal investigation. Its application was refused, but the judge imposed conditions on the retention by HMRC of the digital copies[2].
12. The club appealed by way of case stated to the High Court, with HMRC cross-appealing against the imposition of conditions.

Law

13. The court’s determination involved the interpretation of three sets of statutory provisions.
14. PACE Schedule 1 para. 12 provides for the authorisation of a search for special procedure material. Pursuant to para. 13, a constable[3] may seize and retain anything for which a search has been so authorised. By section 20, this includes a power to require information stored in any electronic form, and permits the constable to require that electronic material is provided in a form in which it can be taken away. Section 22(1) permits the retention of seized material for so long as is necessary in all the circumstances, section 22(2) permits the retention of material seized in a criminal investigation for use in that investigation or prosecution, and section 21(5) permits a constable to photograph or copy anything which he has power to seize.
15. CJPA sections 50 and 51 permit the seizure of material where it is not reasonably practicable to determine there and then whether the material falls within the search and seizure authorisation, or to separate the relevant part from other material. The provisions apply to PACE section 20 seizures by virtue of section 50(5) and Schedule 1 of CJPA. Section 57 provides, in short, that property seized under section 50/51 shall be treated as having been seized under the provision giving rise to the underlying seizure power (in this case, PACE s.20). Under section 63(1), “seize” includes “take a copy of”, but under section 63(3), this does not apply to section 57.
16. Section 17(1) of the Commissioners for Revenue and Customs Act 2005 (“CRCA”) provides that information acquired by the Revenue and Customs in connection with a function may be used by them in connection with any other function. Section 17(2) qualifies section 17(1) as being subject to any statutory provision or applicable international agreement to the contrary.

Issues and Judgment

17. The High Court considered the relationship between the provisions and came to the following conclusions in answer to five questions posed by the stated case.
    1. In isolation, section 22 of PACE does not require the return / permanent deletion by HMRC of copies and images it has made of documents seized under criminal investigation powers, when the criminal investigation has concluded and the seized originals have been, or will be, returned.On its true interpretation, section 22 is concerned with the seized originals and not with copies or images. It is concerned to ensure that there is no greater interference with property rights than is necessary to achieve the purposes of criminal investigation. It does not address other interests which might be protected by other rules of law, for example confidentiality or privacy interests in the content of the information contained within the documents.

       In any event, in this instance section 22 did not apply to the copies by virtue of section 63(3) of the CJPA, which disapplied section 57 and therefore, in turn, section 22 of PACE.

    2. If section 22 does apply, the words “so long as is necessary in all the circumstances” include the case where HMRC seeks to retain the copies and images for public (but non-criminal investigation) purposes. That includes the purpose of the collection of taxes.
    3. Even if a power to retain documents under section 22 of PACE lapses with the conclusion of a criminal investigation, section 22 is not a provision that restricts or prohibits the use of information in such documents for the purposes of section 17(2) of the CRCA. The Crown Court judge was right to conclude that “information” was different from the underlying documents.
    4. Section 17(1) of the CRCA permits HMRC to share information which has been obtained for one of its purposes, for another of its purposes.
    5. Once the judge had concluded that HMRC had the relevant power to share the information under section 17 of the 2005 Act, he was wrong in law to impose terms or conditions on the exercise of that power. That was not a matter for the Crown Court, which was functus officio, having refused the appellant’s application to it. That does not mean that section 17 confers an unfettered discretion. It is governed by the normal principles of public law and can therefore be challenged by an application for judicial review. HMRC will also be subject to the law of confidentiality, in accordance with Marcel v Commissioner of Police of the Metropolis [1992] Ch. 225, [1991] 7 WLUK 289, and its duties under the Human Rights Act 1998.

Conclusion

18. Whilst section 17 of the CRCA is particular to HMRC, the court’s conclusions under PACE and the CJPA clearly extend to other public authorities that investigate crime.
19. The court’s essential conclusion as to the legitimate use that a public authority can make of investigatory material may not come as a surprise. However, the judgment provides a useful analysis of the legal foundation for that conclusion, and a reminder of the various legal principles in play.

Christopher Foulkes

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[1] Standard Life Asssurance Limited and another v Topland Col Limited and others [2010] EWHC 1781 (Ch)

[2] In short, HMRC was to deliver a schedule of the copy documents to be shared with the civil team, the club was to identify those that it considered should not be shared, with reasons as to why not; failing agreement between the parties, the club could reapply to the court.

[3] Or an officer of HMRC, by virtue of Article 3 of the Police and Criminal Evidence Act 1984 (Application to Revenue and Customs) Order (SI 2015 No. 1783).

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