Commentary on Sections Part 1:  Auditors, Accounts, Directors' Liabilities and Investigations Summary and background Section 11 - Disclosure of tax information by Inland Revenue to facilitate application for declaration that accounts are defective
62.This section provides for the passage of information from the Inland Revenue (IR) to a person authorised under section 245C of the Companies Act 1985 and makes equivalent provision in Northern Ireland. That person is currently the FRRP.  It adds new sections and Articles after section 245C of the Companies Act 1985 and Article 253C of the Companies (Northern Ireland) Order 1986.  The new provisions permit the disclosure of information by the IR to a person authorised, under section 245C of the Companies Act 1985 and Article 253C of the 1986 Order, to apply to the court for a declaration that a company's accounts do not comply with the legislation in question.  They also provide restrictions on use and further disclosure of the information.
63.Subsection (1): 245D - Disclosure of information held by Inland Revenue to persons authorised to apply to court.  This subsection adds a new section 245D after section 245C of the Companies Act 1985, permitting the Inland Revenue to pass information to the authorised person if the disclosure is made for a permitted purpose. Subsection (3) of new section 245D defines what counts as a permitted purpose: to enable the authorised person to discover whether there are grounds for an application to the court, or to determine whether or not to make such an application. Subsection (2)(b) of new section 245D provides that  personal data may not be disclosed in contravention of the Data Protection Act 1998.   Under subsection (4) the Inland Revenue Commissioners may delegate the power to authorise disclosure to an officer of the Board of  Inland Revenue.
64.Subsection (1): 245E - Restrictions on use and further disclosure of information disclosed under section 245D.  Subsection (1) also adds a new section 245E to the Companies Act 1985, which places restrictions on the uses to which disclosed information may be put; and on further disclosure by the authorised person.  Under subsection (1) of new section 245E, the uses to which the information may be put are to enable the authorised person to discover whether there are grounds for an application to the court, to determine whether or not to make such an application, and in proceedings on any such application.
65.Subsection (2) of new section 245E prevents information being disclosed by the authorised person to anyone else, except to the person to whom the information relates, or in connection with court proceedings.  Subsection (3) of new section 245E  makes it a criminal offence to breach the restrictions on use or further disclosure set out in subsections (1) and (2), and should be read in conjunction with the amendments in paragraph 10(3) of Schedule 2,  to Schedule 24 of the Companies  Act 1985.  A person guilty of use or further disclosure in contravention of the restrictions is liable on summary conviction to imprisonment for a term not exceeding twelve months or a fine not exceeding £5,000, or both; or, on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.
66.Subsection (4) of new section 245E provides a person with a defence if he can  prove that he did not know or had no reason to suspect that the information in question had been disclosed under this legislation; or that he took reasonable steps to prevent wrongful use or disclosure.
67.Subsection (5) of new section 245E applies to offences under new section 245E, sections 723, 733(2) and (3) and section 734 of the Companies Act 1985. Section 732 concerns restrictions on the institution of proceedings for offences. Section 733(2) and (3) concern the liability of individuals for corporate defaults. Section 734 makes provision for criminal proceedings against unincorporated bodies.
68.Subsection (2)  253D - Disclosure of information held by Inland Revenue to persons authorised to apply to court; and 253E - Restrictions on use and further disclosure of information disclosed under Article 253D.  Subsection (2) inserts, after Article 253C of the Companies (Northern Ireland) Order 1986, two new Articles 253D and 253E whose purpose and effect, in respect of their application in Northern Ireland,  are equivalent to that of new sections 245D and 245E discussed above, in respect of Great Britain.