Select Committee on Standards and Privileges First Report


APPENDIX 39

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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