HMRC have recently failed in a bid to access documents which were submitted as part of what is thought to be the UK’s biggest divorce settlements (a cool £48m), in the widely reported case of Charman v Charman.
This case ended up in the Court of Appeal in 2007 due to the complexities in divorce law of how to divide considerable wealth between a husband and wife, when there are issues such as ‘special contributions’ made by one party, and background trusts some of which Mr Charman argued should not be included in the assets available for distribution on divorce.
HMRC wanted to see the divorce papers as part of an investigation into Mr Charman’s tax position. It is alleged that he owes £11.5m in respect of unpaid taxes.
Mr Justice Coleridge, who originally awarded the pay-out of £48m to Mrs Charman, said the husband’s potential tax liability had been taken into account when determining the claim. However family proceedings are private and the general rule is that documents disclosed within those proceedings should remain so. Mr Justice Coleridge did not consider it a sufficiently good reason to depart from this rule, that the evidence may be useful or relevant to HMRC as part of their investigations.
This case highlights an important issue for people considering whether to start divorce proceedings. Frequently, one of the first questions we as divorce solicitors are asked is: ‘will my information remain private and confidential?’. The answer, in the vast majority of cases, is that divorce and related financial proceedings are private and should remain that way. We have an absolute duty of confidentiality to all our clients, and we do everything in our power to ensure personal information remains confidential. However relevant information must be disclosed to the other party to the proceedings, and of course the court adjudicating upon the dispute. For this reason, it is essential to obtain divorce advice from the outset.