Fears over Treasury tax data plan

Rowena Mason, political correspondent 

The Treasury must urgently explain its plans to allow HM Revenue and Customs to sell the personal data of millions of taxpayers to private companies, Labour has said.

The call comes after the Guardian revealed that ministers were planning to change the law to allow the sharing of anonymised data with third parties, where there is a public benefit. They are currently examining charging options.

Critics fear that the data could include details about income, tax arrangements and payment history and would carry a risk that people could be identified. Even the perception that this could happen might lead to a breakdown in trust between HMRC and taxpayers, the Chartered Institute of Taxation warned.

Shabana Mahmood, the shadow exchequer secretary, has now waded into the debate, calling on the Treasury "to explain urgently if such a programme exists and if so what its purpose is".

"We would be concerned if the government put anything forward that could compromise the privacy of individuals simply complying with their tax obligations," she said.

The plan, overseen by the Tory exchequer secretary, David Gauke, has already provoked a backlash from privacy campaigners and tax professionals. The senior Tory MP David Davis, a former minister and shadow home secretary, branded it "borderline insane" and said the Treasury had come up with no credible justification.

HMRC has not made clear exactly what bits of data it would share and with whom, but it has a wealth of information about people living in Britain. Its director of risk and intelligence said in 2012: "We have more data than the British Library."

The government currently has strict rules about what can be released outside HMRC, with a near total ban on data sharing unless it is beneficial for the organisation's internal work. But despite the restrictions, HMRC has quietly launched a pilot programme that has released data about VAT registration for research purposes to three private credit ratings agencies – Experian, Equifax and Dun & Bradstreet.

To comply with the law, the private ratings agencies, which determine credit scores for millions of people and businesses, have been contracted to act on behalf of HMRC and are "therefore treated as part of the department", giving them access to tax data about businesses that would otherwise be confidential.

The government's plans to change the law to allow the sale of anonymised individual tax data and release of the VAT register were buried in documents as part of the autumn statement and recent budget.

Emma Carr, of Big Brother Watch, said the government should not try to sneak the plans through without a public debate. She said: "The ongoing claims about anonymous data overlook the serious risks to privacy of individual-level data being vulnerable to reidentification."

During the consultation process officials acknowledged there were "concerns around the dangers of individual identities being disclosed inadvertently" but they believe the data can be appropriately protected.

The Treasury confirmed it was proceeding with plans to legislate to make aggregated and anonymised data more widely available, as set out in an HMRC document that said: "The government has decided to proceed with the proposal to remove the legal restrictions that currently limit HMRC's ability to share anonymised individual-level data for the purpose of research and analysis and deliver public benefits wider than HMRC's own functions, but they accept that this must be done only where there are sufficient safeguards in place to protect taxpayer confidentiality."

An HMRC spokesman said: "HMRC is committed to protecting its customers' information. We shall be consulting further on implementing the proposals for sharing anonymised data, and would only take forward specific measures where there was a clear public benefit and subject to suitable safeguards." /Guardian