Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Retail billionaire Mike Ashley has accused HM Revenue & Customs of “egregious” breaches of data protection legislation in a dispute stemming from a tax bill on an £88mn property transfer.
In the latest lawsuit brought by the British entrepreneur, Ashley claimed that HMRC unlawfully denied his request to hand over personal data it had gathered on him during a probe into the sale of 32 properties.
His lawyers told the High Court in London on Monday that HMRC officials made “extremely serious” allegations against him by falsely suggesting that Sports Direct had paid an inflated value for the properties when the retailer, which he founded, purchased them from him.
The dispute, being heard over two days, has its origins in a deal Ashley reached 12 years ago to sell the properties, which he owned personally, for about £88mn to special purpose vehicles owned by Sports Direct
HMRC claimed that the properties had been sold at “an overvalue” and that the businessman, who formerly owned Newcastle United, understated the level of his personal tax liability — namely income tax and national insurance contributions — by about £13mn as a result.
As part of the dispute Ashley’s lawyers demanded that the authority hand over personal records that it held on the businessman.
Data protection law allows anyone to ask to see data processed about them by submitting a so-called subject access request (SAR). Ashley has brought the legal challenge over claims that the disclosures HMRC has made so far have been inadequate.
The litigation is the latest involving Ashley, whose Frasers Group sued Morgan Stanley for €50mn over claims it made a margin call on the retail company out of personal animosity. The case was heard earlier this year before Frasers withdrew the lawsuit in May.
According to Ashley’s lawyers, HMRC opened an enquiry in 2014 over concerns about the property transaction, but dropped its tax demand in 2022 following an appeal by the businessman.
Anya Proops KC, representing Ashley, said it had taken “significant effort and cost for Mr Ashley to achieve that outcome”. She said HMRC had only withdrawn its demand because of issues such as timing, not because it accepted it was wrong in its valuation assessment. She added that Ashley remained “firmly of the view” that it was wrong.
HMRC said it did not accept “various criticisms of its position” regarding the tax probe that Ashley put forward. The tax body, in written submissions, added there should be “no mystery” as to why it “opened, pursued and then closed” the enquiry.
Proops said in written arguments: “The suggestion underpinning the notice [demand] was that Mr Ashley had [caused] Sports Direct to pay over the odds for the properties, and thus that he had for self-serving purposes acted in a manner contrary to the interests of that company and its shareholders.
“These implicit allegations were extremely serious and potentially very reputationally damaging for Mr Ashley.”
She described HMRC’s breaches of “right of access” obligations as “egregious”. An SAR made in 2022 was met with “a complete stone wall”, Proops said.
While HMRC had subsequently disclosed some records, she said the authority “continues to breach its obligations”. Ashley is seeking an order from the court requiring HMRC to provide more personal data, as well as payment of costs.
Lawyers acting for HMRC urged the court to refuse to make such an order. James Cornwell, representing the tax body, said that while HMRC accepted that it failed initially to comply with data obligations, it had since “actively sought, in good faith, to rectify that”.
He said some of Ashley’s demands were “manifestly excessive” and that HMRC “is not in ongoing breach of its duties”.
Additional reporting by Emma Agyemang