HM Revenue and Customs (HMRC) and the Disclosure of Records

Dental Protection has received a number of enquiries with regard to the status on confidentiality of records and applications made by HMRC for access to records as part of routine tax investigations.

Dentists have an absolute duty to protect the confidentiality of patients' records.

The Revenue Commissioners may make an application under Section 19A of the Taxes Management Act 1970. HMRC take the view that by issuing an order under this act the practitioner is obliged to hand over records relevant to a tax investigation and cite a Special Commissioners Case in Guyer versus Walton. Dental Protection has taken Counsel's opinion on the matter and Counsel is of the view that if sight of records are reasonably required in order to confirm the accuracy of tax returns, then there is unlikely to be a basis in law for continuing to refuse disclosure. HMRC must satisfy any practitioner:

That a request has been made because the Revenue believes fees earned and received have been omitted from the Tax Return i.e. they have identified weaknesses in the books and records that may have lead to an understatement of fees.
They have established (at a meeting if necessary) that the patient records are prime income records of the practice and the way in which they are used by the business.
Establish that the patient record cards are the most effective way of working out the true amount of liability. In other words, such documents should only be the subject of a note, issued formally by HMRC if there is no other effective way in which they can be satisfied the return is not incorrect or incomplete.

Dental Protection's advice therefore on the issue of potential breach of confidentiality is:

Advice should be taken on each and every instance where such records are sought.
Where records are sought HMRC should be asked to issue a formal notice under Section 19A of the Taxes Management Act 1970. The notice should also include a reference to the Data Protection Act 1998.
Notwithstanding the above, Dental Protection advises members that all financial records should be kept separately from clinical details. If financial records are held within the same clinical notes, then they should be on a separate sheet that contains no clinical details whatsoever.

If records are to be disclosed then the minimum records necessary for the purpose of satisfying the Order issued by HMRC should be disclosed. Where possible this should be in the presence of the practitioner and clinical details should be concealed in an appropriate manner.

Revised 3 February 2010