Sharing information outside of HMRC: disclosure in insolvency cases: disclosure of information for Law of Property Act Receivers
The rights and obligations of lenders and borrowers who use property as collateral or security for a loan are defined in The Law of Property Act 1925 (LPA). The Act sets out what a lender can do to recover a loan if the terms of the loan are not being met. In the event of a borrower defaulting, a power given by the Act enables an independent LPA Receiver to be appointed but that power only extends to the property over which the legal charge is made and not to the individual or company which borrowed the money. This means that the LPA Receiver has no right to receive any information from HMRC concerning an individual or a company as HMRC would in fact be making a disclosure to a third party. This breaches HMRC’s statutory duty of confidentiality under the Commissioners for Revenue & Customs Act 2005.
The only time we can disclose information to a third party is if it is necessary for our functions ie where it enables us to carry out our duties. ‘Necessary’ doesn’t mean that making the disclosure is the only way in which we can carry out our duties but there must be a direct benefit to the department from doing so.