Proceeds of Crime Bill

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Mr. Ainsworth: I have had numerous dealings over a period of time with parliamentary counsel, as, I am sure, has the hon. Gentleman. Regulations are drafted in a way that is supposed to enact the policy that we give to them. Some of the wordings that they use to do that may not be immediately apparent to all hon. Members. However, they are the experts.

I shall consider the matter again. I do not want to do anything that weakens the Bill. Despite the hon. Gentleman's assurances, I have not heard much from him that would do anything other than weaken our proposals. The removal of the negligence test, which is the main thrust of the amendment that we discussed previously, would take us back to a system that has been completely ineffective to date.

Mr. Grieve: I have some sympathy with the Minister. First, I fully appreciate that he is hardly likely to dismiss the opinion that he has been given by his draftsman in relation to schedule 6. I listened carefully to what he said about that, and was pleased to hear the Government's intentions on the matter. That certainly went some way towards providing reassurance.

It was right to table the amendment, because the offence can be committed either with guilty knowledge or negligently. If guilty knowledge was the only test, the fact that the provision might apply to the cleaner would matter far less, because if the cleaner had guilty knowledge or had picked up information, and knew

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full well that he was helping a money laundering operation, my concerns would not arise.

It is precisely because the Committee has decided to continue for the moment with the clause as drafted, and because the House has decided that the Bill should be passed with a negligence offence, that it is so important to try to exclude from the clause those whom we should not even contemplate criminalising for negligence. Trying to do that adequately while not opening the doors too wide—I am trying to accept the clause as it is, not as I should wish it to be—poses a problem. The Minister has met that problem by tabling an amendment to schedule 6 as a result of consultations.

I do not wish to repeat myself ad nauseam, but—and I say so tentatively, as I am mindful of the skill of parliamentary draftsmen—that is not how the clause reads to me. It seems to leave the matter opaque at best, as the hon. Member for Wellingborough so rightly analysed. The alternative approach would be to include a restriction in the clause, and that is what we have tried to do. I am also mindful of the comments made about the other ways in which the amendment could be drafted, but if schedule 6 raises concerns, the correct approach to take to restrict criminality is to table an amendment to the clause. The amendment would restrict criminality to those

    ''directly involved in the activities . . . regulated.''

That seems to make a lot of sense, although I have picked up on the point about whether one needs the word ''directly'' in there.

The amendment may not be perfect, but I shall press it to a Division, if only to create a benchmark, as I believe that the matter will have to be considered again, either—depending on what the Government do—on Report or in another place, where there will be many people who can decide with far more skill than I can whether schedule 6 does what the Minister says it does. I am grateful to him for his comments, but I want to vote on the amendment.

Question put, That the amendment be made:—

The Committee divided: Ayes 7, Noes 11.

Division No. 29]

AYES
Brooke, Annette Carmichael, Mr. Alistair Field, Mr. Mark Grieve, Mr. Dominic
Hawkins, Mr. Nick Tredinnick, Mr. David Wilshire, Mr. David

NOES
Ainsworth, Mr. Bob Baird, Vera Foulkes, Mr. George Hesford, Stephen Lazarowicz, Mr. Mark Lucas, Ian
McCabe, Mr. Stephen McGuire, Mrs. Anne Stinchcombe, Mr. Paul Stoate, Dr. Howard Watson, Mr. Tom

Question accordingly negatived.

Mr. Grieve: I beg to move amendment No. 99, in page 187, line 35, after 'customs officer', insert 'Inland Revenue officer'.

The Chairman: With this it will be convenient to take the following amendments: No. 500, in clause 327, page 189, line 26, after first 'officer', insert ', Inland Revenue officer'.

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No. 504, in clause 328, page 189, line 37, after first 'officer', insert ', Inland Revenue officer'.

No. 505, in clause 328 page 190, line 3, after 'officer', insert ', Inland Revenue officer'.

Mr. Grieve: The amendments are designed to deal with the problem of Hansard agreements. The Minister may tell me that I am wrong, but an unintended consequence of the clause is that it seems to make a Hansard agreement almost impossible.

I will explain the situation. There is a well-established practice in law, which I believe dates back to 1944, whereby if a person wants to make a clean breast to the Inland Revenue about his tax evasion, he can do so. He will be required to pay the tax, and almost certainly to pay a penalty that could be substantial, but he will avoid the risk of being criminalised and prosecuted. That is dependent on the individual making a clean breast to the Inland Revenue, and in doing so showing that he is not seeking to withhold certain information. Subject to such provisos, he may take such action in confidence, and that confidentiality will be maintained.

I think that I am right in saying that, subsequent to such an agreement having been reached, the information remains wholly confidential for virtually all purposes, although disclosure of the fact that a person has had to pay a penalty to the Inland Revenue under those circumstances may sometimes be necessary. However, that is only in restricted areas, such as if the person were to apply for judicial office or the like.

Hansard agreements are thus well established and there has been no suggestion that they should be removed. It has always been my understanding that they are a useful device for enabling the Government and the Inland Revenue to obtain money to which they are entitled. The agreements also enable people to clear up back tax issues for which they might otherwise be liable for prosecution. The clause makes no mention of the Inland Revenue as a body to which disclosure can be made. It refers to ''a nominated officer'', but I believe that that refers to someone within the person's own organisation.

The amendments would ensure that the Hansard agreements mechanism is maintained. Let us suppose that a person consults his tax adviser or accountant—which does happen—and says, ''I have been extremely stupid and greedy, and over a number of years I have failed to declare to the Inland Revenue income that I have received from my garage business. Can you help me out of my difficulties?'' The accountant would normally be able to help that person by explaining the principles of the Hansard agreement to him and contacting the Inland Revenue on his behalf.

Such action would be impossible under the clause, because at the time that a person consulted him, the accountant would have no means of knowing whether he was being wholly truthful. It is possible that not only had there been tax evasion, but that the money was the proceeds of crime. Those two factors, as the Minister and I have previously agreed, can sometimes be linked.

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10.15 am

If the money is the proceeds of crime, people other than Inland Revenue officers will have an interest in it. However, the poor accountant or solicitor cannot disentangle the matter. What is the accountant or solicitor supposed to do? As the legislation stands, he cannot even ring the Inland Revenue, because if he did he would be guilty of the offence of tipping off. Even if he does ring the Revenue, he cannot help his client, because the Revenue is not a relevant officer under the clause. That is why the amendments cover the whole of part 7 and apply through each sequence—but I will not go into that in more detail, because I hope that the Committee has got that point, and I do not wish to take up too much of its time.

The purpose of the amendments is simply to turn the Inland Revenue officer into a relevant person to whom disclosure can be made, as that would get the accountant or solicitor off the hook.

Unless the Government wish to depart from the previous principle of Hansard agreements, I cannot see why they should find the amendments unacceptable. There is only one conceivable problem with them, which is if the Minister were to say, ''The Inland Revenue, with its duty of confidentiality, would not be in a position to carry out the sort of investigation that we want NCIS to be able to conduct.'' If he said that, the Government would have to make a decision about whether they wished Hansard agreements to survive, because the key quality of such an agreement is its confidentiality.

There is an alternative approach. During the course of its Hansard agreement inquiries, the Inland Revenue might conclude that the money was not legitimately acquired, and therefore that more serious matters had been taking place than mere tax evasion. To cover such circumstances, a device or principle could be added to the legislation to entitle the Inland Revenue to make a disclosure to NCIS about its suspicions that the money was the proceeds of crime.

If the Minister has concerns about the amendments, that would be the correct approach for him to take, because otherwise the accountant or the solicitor would be put in an impossible position.

Stephen Hesford: I want to outline a potential problem. If a criminal was aware that there were Revenue functions with regard to the legislation, and if he was afraid of them, he could avoid them by going to his accountant for such an agreement, which the accountant would be under a duty to honour. The accountant would also be let off the hook, because he would have reported it down the line. That might be a route to take to avoid disclosure. It is unclear to me whether NCIS would ever get the information.

 
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Prepared 24 January 2002