Letter from the Parliamentary Commissioner
for Standards to Mr Kevin Walmsley of King & Co., Chartered
Accountants
As you may know I am conducting, on behalf
of the Select Committee on Standards and Privileges, an inquiry
into allegations by Mr Al-Fayed and The Guardian involving
Mr Neil Hamilton and other Members.
Mr Hamilton has produced to my inquiry a File
Note prepared by you during, or following, a telephone conversation
on 24 July 1990, together with a letter written by you to Mr Hamilton
and dated 27 February 1997 - both documents are attached (although
there is a Number 1, in the "conversation" box in the
file note I have assumed that this document is complete, and
I have also assumed that there was no follow up correspondence
- no doubt you will correct me if those assumptions are incorrect).
I would be grateful to receive your comments
on the last three lines of the July 1989 File Note which read:
"`Worth a try' KW said not at all hopeful.
MNH said no expectation of commission, just good fortune. Declare
as ex gratia payment." The following questions
arise:
1. Is "Worth a try" your remark,
or a remark made by Mr Hamilton?
2. Was "declare as ex gratia
payment" your advice to Mr Hamilton or Mr Hamilton's instruction
to you?
Answers to these questions, and, of course,
any other comments you wish to make would be appreciated.
I should point out, as is my practice with all
witnesses, that evidence supplied for the purposes of this enquiry,
and any related correspondence, is covered by Parliamentary privilege
and remains confidential unless and until it is published by
the Select Committee on Standards and Privileges to whom I shall
report. If such evidence or correspondence were published or
divulged to a third party without the express authority of the
Select Committee it would not be covered by Parliamentary
privilege, and this would also be likely to exclude reliance on
any privilege which it might otherwise attract at common law.
Moreover, such an unauthorised disclosure would be likely to
constitute a contempt of the House. Any attempt to obstruct my
enquiry by any other means could also be treated as a contempt.
I am copying this letter to Mr Hamilton.
13 March 1997
Record of a Telephone Note
Date: 24 July 1985 Time: 10.30 From: Neil Hamilton
Conversation: Re: Tax Return
1. Income from Commissions obtaining
clients for a firm of Parliamentary Consultants:
£5,500 | 1988-89 | £4,000 is NNC |
[£4,500 | 1989-90] | £1,500 US Tobacco |
Case for saying £4,000 is ex-gratia from Ian Greer (who gives
10 per cent of first year charges).
"Worth a try" KW said not at all hopeful.
MNH said no expectation of commission, just good fortune. Declare
as ex gratia payment.
Letter from King and Co. to Mr Neil Hamilton
MP
YOUR PERSONAL TAXATION AFFAIRS
You have asked us to write to you confirming
our contemporary recollection of events in 1989 relating to receipts
from Ian Greer.
We confirm that you telephoned our office at
10.30 am on 24 July 1989 to discuss your receipt of £10,000,
£5,500 in 1988-89 and £4,500 in 1989-90.
Had the payments been made pursuant to a contractual
agreement, they should, in our opinion, have been taxed at source
and reported to the Inland Revenue by the payer. They should then
have been included in your tax return.
However, you advised us that the payments were
made on a ex gratia basis following the introduction of
two clients by you to Ian Greer. In other words, they were not
contractual, but in the nature of a gift. They are, therefore,
considered not subject to income or capital gains tax in the hands
of the recipient.
At the material time there was no requirement
to disclose on the tax return the receipt of gifts other than
those received in the course of employment, or which could be
construed to be payment in exchange for services rendered.
We subsequently completed your tax return
on this basis and this was sent to you for approval and signature.
The view that payment was a non-taxable gift
is supported by a number of tax cases including Bloom v Kinder
and Dickinson v Abel. In carrying out further research on this
point we have come across the Court of Appeal decision in Scott
v Ricketts (1967) where Lord Denning said:
"The crux of the present case is that Mr
Ricketts had no legal ground to be paid anything . . . the sum
. . . would not come within Case VI." This would strengthen
the original view.
In view of the fact that these payments have
become the focus of public interest, we did last October invite
the Revenue to consider the point. As you are aware, negotiations
have been taking place with the Inland Revenue relating to a
number of unrelated issues and this has delayed the agreement
of your taxation affairs.
We can confirm also that taxation returns have
been submitted to the Inland Revenue on a timely basis up to
and including 5 April 1996.
27 February 1997
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