The Supreme Court yesterday released its decision - which a senior figure at The Times called "worrying" - in the case of the Crown (on the application of Ingenious Media Holdings) versus HMRC, following a hearing on 4 July.
In 2012, HMRC's permanent secretary for tax David Hartnett gave an 'off the record' interview to two Times journalists, giving them information about Ingenious having avoided tax through use of partnerships with film production companies, using tax incentives that are no longer available.
A story using this information was published a week later, containing quotes from an unnamed "senior revenue official". One of the key passages in that article - cited in yesterday's judgment - said that Ingenious founder and CEO represented "a threat" to HMRC, saying the taxman "believes that film schemes have enabled investors to avoid at least £5bn in tax".
Ingenious brought a judicial review of the taxman's actions, which was rejected by the High Court in 2013. The company appealed that decision to the Court of Appeal, and after that was rejected in 2015 it again appealed to the Supreme Court.
The judgment from the Supreme Court noted that the interview had been given, in the recorded words of Hartnett, "off the record", with the £5bn figure "utterly off the record".
The judgment says that it cannot be taken that law governing HMRC's activities has the effect of "authorising HMRC officials to discuss its views of individual taxpayers in 'off the record' discussions, whenever officials thought that this would be expedient for some collateral purpose connected with its functions, such as developing HMRC’s relations with the press".
It also notes: "'Off the record' is an idiom and like many idioms can bear different shades of meaning. It may, for example, be intended to mean 'strictly confidential' or it may be intended to mean 'not to be directly quoted or attributed'. The judge found that Mr Hartnett understood it to mean that the interview was to be a 'background briefing', intended to influence the journalists’ views and what they wrote about matters affecting HMRC, but not to be published."
Despite acknowledging Hartnett's understanding that the information would not be published, it concludes that "the idea of HMRC officials supplying confidential information about individuals to the media on a non-attributable basis is, or should be, a matter of serious concern", and finds against HMRC.
Both parties may now provide submissions to the court as to whether HMRC should cover some of its opponent's legal costs, or pay damages.
Pia Sarma, editorial legal director for Times Newspapers, and deputy general counsel for its parent company News UK, said: "It's worrying that the focus seems to be turning on people who want to talk to journalists. Punishing them without looking at their reasons discourages whistleblowers and threatens to dry up the information flow that is so crucial if journalism is to ask difficult questions."
David Engel, a partner at the law firm Addleshaw Goddard, said the judgment was served as "a reminder of the need to be careful about what is said to the media on an 'off the record' basis", going on to say: "A useful rule of thumb is not to say anything off the record which you would not be happy to see in print."
Phil Morcom, chair of the National Union of Journalists' public relations and communications council - a number of the union's members are PR professionals - said: "Any PR worth their salt knows the value of 'off the record' chats. They also know that drawing a distinction between 'on the record' and 'off the record' is potentially risky, and you can expect little sympathy if your judgement of the risk is wrong.
"When senior staff deal with journalists and fail to behave ethically or professionally, making poor judgements, they face the risk of coming up short, as in this case," added Morcom, who works in local government comms.
An HMRC spokesman said the organisation was "naturally disappointed" at the decision, having already won the case in two courts, and that it would "examine the judgment in detail". It also said that it had no bearing on a separate tribunal victory regarding Ingenious, which "protected around £400 million in revenues for the Exchequer".
The spokesman declined to comment when asked whether the case might bring about change in the way it trained press office or non-press office staff.