Inland Revenue stakes claim to loyalty card databases

Confusion prevails this week over whether the Inland Revenue (IR) should be given access to consumer data held by retailers through loyalty card schemes.

The IR has claimed it has a statutory right to use information collected in loyalty card databases as evidence in the investigation of specific cases of suspected tax fraud.

But the Data Protection Registrar (DPR) - the government's consumer protection watchdog - is currently undecided as to whether loyalty scheme information should be made available as data to tax investigations under existing legislation.

Jonathan Bamforth, assistant registrar at the DPR, said: "We don't know whether the Tax Management Act covers this sort of information. We have only just come across questions over loyalty scheme data and it's still under investigation."

But a spokeswoman for the IR said the department has a statutory right to loyalty scheme information just as it has access to bank account details and others in a case under investigation.

"Information like this is called third-party information. If an inspector in the Revenue who is carrying out an investigation case thinks he has good reason, he could go to Commissioners of the Inland Revenue to ask for the authority to get the information from the supermarkets or retailers," she said.

Two of the major customer loyalty database holders - Sainsbury's and Tesco - admit they will have to give up information about the customers if the Inland Revenue forces them.

Greg Dawson, a spokesman for Sainsbury's, said: "Only in exceptional circumstances and we would want specific details from the IR would we reveal any data. We would treat it with seriousness. If it was a serious investigation and we were given specific details. We would never release information without good reason."

Tesco's spokesman claimed the company has been aware all along that it may have to surrender its 'Club Card' data should the Revenue demand it but said the need hasn't yet arisen.