|Proceeds of Crime Bill
Mr. Hawkins: I understand what the Minister has said about subsections (1) and (2), but I am puzzled, because subsection (3) seems to be somewhat circular—although that might be due to my failure to understand it. Although I understand that it is necessary to make specific arrangements with regard to section 29 of the Taxes Management Act 1970, where there is a service on the board of a notice of withdrawal, I do not understand the use of the word ''invalid''. Can he explain why that word is included in subsection (3)?
Mr. Ainsworth: Where the director withdraws his notice, he is effectively handing the case back to the normal taxation regime, and we are anxious not to extend the powers of the Revenue. We want the director to use his powers to pursue particular individuals in particular cases, and we also want to keep that separate from the rest of the taxation system. If subsection (3) did not exist, where the notice had been withdrawn, we would effectively be handing back to the Revenue the ability to levy a sourceless tax liability.
Mr. Hawkins: That is what I understood to be the intention of subsection (3). I agree with the Minister. I would not want the legislation to extend the Revenue's general powers, and I understand his point that the director is being given special powers that are, for good reasons, wider than those of the Revenue.
However, I am still puzzled by the use of the word ''invalid'' in subsection (3). I am unsure whether the wording of that subsection will do what the Minister thinks it will. Surely, it should be saying something along the lines of, ''When the director withdraws from
Column Number: 944the use of his powers, and they return to the Revenue, only the general powers will apply.'' I do not understand why any question of invalidity should arise. Subsection (3) is very oddly drafted.
Mr. Ainsworth: There might be a mixture of liability. That is the point that is being addressed. The notice is being withdrawn, and the tax power is effectively being handed back to the normal taxation system. Therefore, the assessment is invalid only to the extent that it does not specify a source of income. If other parts of that assessment do specify a source of income, they remain valid and remain a liability, because those are the powers that the Revenue would have had anyway, had it been in charge of the case in that period. With regard to that part of the assessment where no source of income has been identified, the assessment should be rendered invalid because the Revenue does not have that power.
Mr. Hawkins: Would not it be more logical and sensible to put the phrase the other way round? Rather than the assessment being invalid to one extent, the provision could state that it remains valid only where a source for the income is disclosed. Would not that be a neater, more positive and clearer expression?
Mr. Ainsworth: It could well be, but I am told that once an assessment has been made, it cannot be unmade, except in accordance with the Taxes Management Act 1970. I hope that that goes some way towards explaining the reasoning behind the wording.
Mr. Hawkins: Perhaps I may pursue the point a stage further now by making a short speech, rather than continuing to make interventions. I hope that the Minister will agree at least to reconsider the wording of subsection (3). A tax assessment would not have to be unmade in order to improve the wording. Surely, the provision should state that if the assessment is passed back to the normal Revenue processes, it remains valid where the source of income is specified? It could be rewritten to read, ''Any assessment is valid only to the extent that it does specify a source for the income.'' That would be make the issue clearer, ensuring that everybody understands that when the powers are operated, the normal powers of the Revenue are working only to their proper extent. In other words, subsection (3) introduces a totally unnecessary double negative that is confusing and unclear.
Mr. Ainsworth: I do not pretend to be a taxation expert, and I do not think that the hon. Gentleman is one. It is not the first time that I have seen double negatives in legislation, nor will it be the last. I do not pretend to have the skills that parliamentary counsel have. I will, of course, consider the issue that the hon. Gentleman has raised. If the suggested rewording improves the clarity of the Bill, I will certainly consider it.
Mr. Grieve: Again, I am grateful to the Minister for having explained the import and impact of clause 313. We will have, I suppose, to wait to see how it works in practice. I can see the point behind it. Let us suppose that a person finds £25,000 in a cardboard box in somebody's cupboard—I must correct myself at this
Column Number: 945point, because in those circumstances, I expect that the other powers under the Bill would be used. I have a niggling difficulty in trying to think of situations in which the director will want to exercise those Revenue functions because his other powers are insufficient. How would he identify a source of income? If he could not do so, would he say, ''I cannot identify the source, but I'm going to tax it.'' I suppose one example would be when there is a regular payment into a bank account, the source of which cannot be identified.
If £25,000 is found in a box in somebody's house, that person would probably be prosecuted under other
Column Number: 946provisions for civil recovery. Alternatively, the confiscation provision could be used. Let us suppose that a person had no previous convictions and the confiscation provisions could not apply. If, on the balance of probabilities, it could not be shown that the money had been acquired through unlawful conduct, the money could be taxed on the basis that the burden would be on the person to show its provenance and demonstrate that it is not income.
It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at half-past Four o'clock.
The following Members attended the Committee:
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