|Proceeds of Crime Bill
Mr. Grieve: I am glad to hear that, although the problem is a little more twisted than that. A person will no longer be able to get advice from their tax adviser about making a Hansard agreement. The adviser might say, ''I'm sorry, but there's no such thing as a Hansard agreement—goodbye,'' and then, without the client's knowledge, pick up the telephone and say to NCIS, ''My client was seeking a Hansard agreement. I sent him away, but I think that you should know about it.'' Legal professional privilege would prevent that.
The irony is that NCIS will have to get information through another channel; the voluntary declaration via the tax accountant will come to an end. Surely that would be the consequence of the measure. The accountant or adviser will not be able to tell the Revenue because of legal professional privilege.
Mr. Ainsworth: He will. The hon. Gentleman says that if the adviser tells the Revenue, he will be guilty of tipping off, but clause 325 states that the tipping-off offence applies where the disclosure may ''prejudice any investigation''. I do not see how telling the Revenue could ever be prejudicial to an investigation. Of course, the Hansard procedure supports my assurance.
Yes, there is a fear that the measure could discourage people from coming forward, knowing that a report will be made to NCIS—rightly so, if serious criminality is involved. We must assure people that we do not intend to alter the Hansard process, and that the intervention of NCIS in the information stream will not alter the way in which the case is dealt with when it eventually reaches the Revenue. The Revenue is not in a position to know whether criminality, other than tax evasion, is involved, nor is the accountant or tax adviser. NCIS knows that; it collects such information. However, if the tax evasion is purely minor, it will be passed on to the Revenue, which will deal with it. We are trying to ensure that that will not change.
Mr. Grieve: I am interested in the Minister's comment that the offence of tipping off would not apply to information given to the Inland Revenue because it would not prejudice the investigation. I can see the force of the argument. In that case, the Bill should state explicitly that there is no prejudice in
Column Number: 1144tipping off the Revenue, because that is not the understanding that tax advisers have of the matter.
The future of Hansard agreements is much more complicated, notwithstanding the Minister's comments. Inevitably, widening the principle by which the Revenue deals with the issue so that NCIS immediately becomes engaged is likely to be a powerful deterrent to individuals from providing information to their accountants to settle their affairs. The Minister may be right in saying that that is a good thing if someone has something to hide, but I suspect that it will also affect people who have nothing to hide but who are frightened of the consequences of bringing a substantial criminal investigation by the National Criminal Intelligence Service down on their backs, when previously they had more confidence in the practices of the Inland Revenue. If that is a public policy decision I must accept it, but we are in danger of throwing the baby out with the bathwater. My impression, which the Minister confirmed, is that the Inland Revenue has been broadly satisfied with the way in which Hansard agreements work, and considers them a good principle and device. Otherwise it would have got rid of them a long time ago.
Mr. Ainsworth: The point about potential deterrence has been raised with us, which is why we consulted the Revenue. The hon. Gentleman heard its view. My main reason for intervening now is that although I got cross with the hon. Member for Surrey Heath, in the end I did not get to the points that he asked me about. Although he is not here now, he might want to know that although Customs and Excise has particular responsibilities for investigating crime generally, and money laundering in particular, the Inland Revenue has no such responsibilities, which is why the Revenue is treated differently from Customs and Excise.
Mr. Grieve: I thank the Minister for that explanation.
I will ask the Committee's leave to withdraw the amendment, but with some reluctance. People should be able to come clean on their tax affairs in the way that Hansard agreements provided for, and in practice that will become less likely. An individual will not go to see his accountant and say, ''Look, this is what happened,'' because he will be advised that the Hansard agreement no longer works in the same way. Indeed, it will be even more difficult, as the accountant will have to tell the person to go away. Even in explaining the way in which the new system works, he would be alerting the client to the fact that he might have to tip off NCIS if the client wanted him to notify the Inland Revenue. The change will put the tax adviser in considerable difficulty, and I ask the Minister to examine that aspect. The tax adviser will have a problem, because he will want to go along with the laws that the Minister sets out.
I will sketch out the specific situation so that the Minister understands. The client comes along and says, ''I have a tax problem; I want to come clean.'' The tax adviser can tell him about the Hansard agreement, and say that he can notify the Inland Revenue on the client's behalf, but at the same time it is in his mind that he must also tell NCIS without
Column Number: 1145telling his client. That puts a professional adviser in considerable difficulties, as the confidentiality of the communication with the Revenue used to be a paramount consideration. In reality, if someone tells the tax adviser that they have a problem with the Revenue, the adviser will just have to say that he does not want to know about it. A legal professional adviser would have great difficulty in dealing with that issue.
I see a note being passed to the Minister, so he may be able to reassure me that I am wrong. However, an accountant would not be covered by legal professional privilege, so he would be in an even more difficult position. I cannot help thinking that a channel of information that has been of value to the Inland Revenue will simply dry up.
Mr. Ainsworth: I do not see some of the difficulties that the hon. Gentleman does. Obviously, advisers may want to make their clients aware of the general requirements under the law, and the idea has been raised with us that that could deter people from coming forward. In making their clients aware of their legal requirements, the advisers will make them aware that in certain circumstances they have a requirement to disclose. They will not then be in the difficult position of failing to point out to the individual that they must make a report in given circumstances. We want people to behave professionally and make reports where appropriate. People will decide whether to tell clients their obligations, and the manner in which they will do so, before having dealings with them.
Mr. Grieve: I see the point of that. In one of our debates, some hon. Members said that several City institutions already issue a prospectus stating that confidentiality no longer applies in cases of suspected money laundering, and that if they received information about such cases, they would make a disclosure under the Drug Trafficking Offences Act 1986. Organisations do not tell the client that they are going to make such a disclosure, but they make it clear that the confidentiality that used to exist is limited by that factor. Accountants, solicitors and others will doubtless make it clear to clients that that rule will generally apply in dealing with their tax affairs.
That is likely to mean that individuals no longer go to accountants to seek advice on Hansard agreements because accountants, unlike solicitors, have no legal professional privilege. Accountants' advice on the matter would force an immediate reference to NCIS, which would surely dry up that channel of communication.
I have raised the matter now, and I will not press it to a vote, but I will discuss it further with those who encouraged me to table the amendments. If they are not satisfied with the Minister's answers, we may return to it on Report.
Mr. Ainsworth: To try to reassure the hon. Gentleman, I can tell him that the measure should not breach ordinary taxpayer confidentiality. There will be no requirement for NCIS to report to any body other than the Revenue, such as police authorities or enforcement authorities, unless an offence other than
Column Number: 1146tax evasion is involved. Information will be reported to and kept by NCIS, and reported back to the Revenue, where appropriate, to be dealt with under the Hansard procedures.
Mr. Grieve: I appreciate that. I said at an earlier sitting, slightly tongue in cheek, that the Inland Revenue was like the Spanish inquisition, as in the Monty Python sketch where people come bursting in whenever its name is mentioned. Similarly, NCIS has all the attributes of Big Brother: it is watching us and picking up lots of information which it holds secretly and close to its heart, communicating it only to the Spanish Inquisition.
I appreciate that the Government are trying to curb criminality, but the measures may constitute practical impediments to the orderly administration of society and the collection of tax revenue. Have the Minister's officials had further representations from those who work with taxation to give the matter careful consideration? I will ask the industry for its views on the Minister's comments in Committee, and we may return to the matter on Report. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Grieve: I beg to move amendment No. 488, in page 187, line 40, after 'and', insert 'believes'.
The line of the clause that the amendment would affect is about legal professional privilege. A person does not commit the offence of failing to disclose information if he has a reasonable excuse, or if he is a professional legal adviser and the information or other matter came to him in privileged circumstances. The amendment would provide that someone had to believe that the information, or whatever, had come to him in privileged circumstances, which would introduce the test of guilty knowledge rather than of negligence.
Put simply, legal professional privilege has always been a well established rule of our law, and it has repeatedly been justified on public policy grounds. In a recent case concerning obtaining tax advice, the Inland Revenue tried to obtain papers from the tax barrister who gave the advice, but the courts held that there were powerful public policy reasons for upholding legal professional privilege.
An interesting issue, which we shall consider later, is that there are no statutory efforts of which I am aware to define what constitutes legal professional privilege. However, to my surprise, in part 8—which I shall not debate now—I was able to identify at least one passage in which there is an attempt at defining legal professional privilege so that it does not cover, for instance, the identity and address of a lawyer's client.
As the term has not been statutorily defined, I would think it extraordinary if a legal adviser who received information and believed that he was covered by legal professional privilege were criminalised for making that mistake. The amendment is designed to deal with those circumstances. It would make the legal adviser aware that he was not covered by legal
Column Number: 1147professional privilege, so that he would not make such a mistake.
There may be occasions when a solicitor is not covered by legal professional privilege, particularly for a straightforward transaction that does not require the provision of legal advice, but there is a grey area in which the one fades into the other. I would be concerned about introducing a negligence test unless the Minister could persuade me that there are good and sufficient reasons to do so.
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