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Think Carefully About the Data You Store On Your Computers



Sadly Steve Allen died in July 2011. His wife Leah would like to thank all those who know Steve and helped contribute to his success. She has recommends Steve's clients and anyone who is interested in this article topic to contact Rob McCann from “The Vat people” on (tel) 0161 477 6600 . Please make reference to Steve Allen.

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Issued July/August 2010

A recent judicial review case has once again raised the issue of the data kept on business computers, and HMRC’s right to access it in the course of their enquiries.

In Glenn & Co (Essex) Ltd, the High Court rejected an application to judicially review HMRC's powers to ‘inspect’ computers. The Appellant was a registered dealer in excise goods, and was visited by a team of HMRC officers. The visit was unannounced, and no warrant had been obtained for it.

Relying on inspection powers granted under the Customs & Excise Management Act 1979 (CEMA), the Officers decided to remove a number of computers and a server to enable the hard drives to be interrogated. All but one of the computers were returned the next day, with the remaining computer and the server being returned the day after. The Appellant sought judicial review of the scope of HMRC’s powers to inspect ‘documents’ under CEMA, alleging that it did not extend to computers, despite the fact that s.114 Finance Act 2008 widened HMRC’s powers to inspect computerised records. The High Court rejected the Judicial Review application and confirmed that HMRC’S inspection powers do apply to computers.

At first glance, it seems surprising, if not plain worrying, that the absence of a search warrant seemingly had little or no bearing on the outcome of the case. However, it should be noted that the Appellant originally requested a review on two grounds; the first was on the absence of a warrant, and second that the powers do inspect ‘documents’ do not extend to computers.

For reasons not clear, the Judge only gave the hearing on the basis of the second one.

This case should serve as a timely reminder to all businesses to think carefully about the information being kept on their computers. This is said not just in terms of your business records, but also in relation to private information, given that we live in an age where many people have computers at home which are used for both business and private purposes.

The reality is that the chances of an HMRC Officer inadvertently getting access to private files as a result of his VAT enquiries have clearly increased. In short, if you do not want such data to be seen, either remove it from the computer, or else transfer all the business records (to a wholly business computer) so that the computer becomes wholly private.

About the Author

STEVE ALLEN is the Managing Director of VAT Advisers Ltd, and has more than 19 years’ experience in VAT. Beginning with HM Customs & Excise in 1990, Steve spent 8 years in the Department in a variety of roles such as VAT Insolvency and VAT investigation in Liverpool, and latterly as a VAT Inspector at Wigan VAT Office.

Steve left the Department in 1998 to become a consultant with Latham Crossley and Davies, before joining Ernst & Young. In 2001, Steve formed VAT Solutions (UK) Ltd with a co-Director, and built up a successful practice over 8 years before setting up VAT Advisers Ltd in September 2009.

Steve advises accountants and individual businesses on all aspects of VAT, but in particular, issues concerned with land and property, charities, cross-border trading, and arrears of VAT.

VAT Advisers Ltd,
1 Dundonald Avenue
Stockton Heath
(t) 01925 212244
(f) 01925 212255
(m) 07810 433927

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Article Published/Sorted/Amended on Scopulus 2010-09-17 18:13:47 in Tax Articles

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