|Proceeds of Crime Bill
Mr. Grieve: I am grateful to the Minister for taking the time and trouble to give us an exposition of the background purposes of the Bill and the manner in which he intends it to operate. I intend to withdraw the amendment because he has given me cogent reasons to do so. In any event, the amendment was a probing amendment, designed to stimulate our discussion.
I want to flag up one issue that I do not intend to develop further now because we will return to it when we discuss my amendment to clause 313, which is in a similar probing mode. The Minister emphasised that a principal reason to reject the amendment is the need to maintain conformity in tax practice. He rightly stated that because the amendment did not contain a reference to further evidence that came to light, it
Column Number: 937did not conform with section 29 of the Taxes Management Act 1970. We can return to that later.
As the Minister explained, the director will have access to far more information with which to pursue his inquiries than the Board of Inland Revenue. I have no difficulty with that. The director will, through the crime prevention system, have access to information that the board would not normally be able to obtain in its investigations. The Minister made it clear that that is one of the reasons why the director will be in a better position to secure tax than the board. As he explained, the file would have to be vetted before it went back to the board, in order to ensure that the director did not pass back information that could subsequently be used for the purposes of ordinary taxation.
The Minister touched on the ability to tax when unable to identify the source, an issue to which we shall return under clause 313. That is a profound difference, and is ultimately at the nub of setting up a parallel but separate taxation system. Although I accept what the Minister said, I shall want to consider the issue further when we discuss clause 313. It is an important distinction, and the Committee should understand it. It is not just a matter of the director being the better person to levy tax because he will be more focused on particular people; it is a matter of giving him powers and advantages that the board does not have.
I hope that it is clear that we will discuss the subject later—I see the Minister nodding. I alert him to my interest in the topic and agree with him that it would be most unwise to have different powers from those under section 29 of the Taxes Management Act 1970. I am grateful to him for starting the debate and beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Grieve: I beg to move amendment No. 476, in page 180, line 39, leave out subsection (8) and insert—
The Chairman: With this it will be convenient to take amendment No. 478, in clause 315, page 182, line 31, after 'Director', insert 'jointly with the Board'.
Mr. Grieve: In the light of the discussion that we have had, I do not wish to labour the two amendments. However, they raise an issue that was not fully discussed in our earlier debate, so they are worth considering.
It is axiomatic that, once the director has given notice and seized on a tax issue, it is his decision making and discretion that will be exercised while he decides whether tax should be levied on a person or company. The Minister—I think I understood him correctly—emphasised that he would expect the director to liaise closely with the Board of Inland Revenue about the exercise of his functions. The Committee should consider where the discretionary buck stops. Does it stop with the director or, as I have suggested through my amendments, should a statutory
Column Number: 938framework require the board to intervene? Should the board's view be sought, and if so, in what circumstances?
The two amendments are different. Subsection (8) appears to give blanket power to the director: he can exercise a power that has not been specifically conferred under part 6 without obtaining the board's authorisation. That is a Henry VIII provision. It may be that the powers conferred under part 6 are so wide, extensive and well drafted that the issue will not arise. However, amendment No. 476 seeks to provide that, should the director wish to exercise a power not specifically conferred under part 6, he would have to get the board's permission.
The Minister may be able to reassure me—amendment No. 476 is a probing amendment. However, it raises an important issue because subsection (8) appears to give wide powers to the director—potentially wider than the powers described by the Minister in his helpful opening comments.
Amendment No. 478 concerns transfers of value under clause 315. With regard to service of a notice, instead of vesting in a director
those functions should be vested jointly with the Board of Inland Revenue.
Our debate has thus far concerned mainly income tax. However, clause 315 deals with inheritance tax and, effectively, transfers of value. Different tests and problems may arise or apply in respect of that. Clearly, the board has a great deal of experience in dealing with transfers of value and inheritance tax. My impression is that such matters tend to be dealt with by the capital taxes office—a discrete area in the Inland Revenue.
The director may be biting off more than he can chew, which is one reason why I suggested that those functions should be jointly exercised with the board rather than being left to his discretionary powers. What problems does the Minister foresee in relation to such a capital tax as opposed to taxing income in cases in which the source cannot be identified? Separate problems may arise, which is the reason for that amendment.
I emphasise that amendment No. 478 is also a probing amendment. I am concerned that we should not be so focused on income tax and the idea of income coming from a source that we do not blind ourselves to the capital tax issues. Indeed, I cannot help thinking that, in the context of criminality, capital tax and taxation of capital assets with no identifiable source may prove to be a better way of raising money than taxing people's income. I see the Minister nodding, so it is all the more important that we get this matter right. I await his comments.
Mr. Ainsworth: The operational independence of the director is important if he is to be effective. Clause 2 sets out how the director is to operate his functions. Subsection (5) of that clause requires the director to have regard to any guidance issued to him by the Secretary of State. We debated the matter when we considered clause 2, and I circulated a paper to
Column Number: 939Committee members that further clarified how that will operate in practice.
The director will be accountable to the Secretary of State for the operation of his functions. He will not be accountable to the Board of Inland Revenue, which is in turn accountable to Treasury Ministers. Clause 2 requires the director to exercise his functions in a way that is best calculated to contribute to the reduction of crime, and he will be accountable to the Secretary of State for his performance in that respect. The Board of Inland Revenue is accountable to Treasury Ministers in the operation of its functions, notably tax collection. Although the Revenue will contribute to the reduction of crime and will work with other Departments in doing so, its primary focus is on the efficient and effective collection of tax, and its performance measures have been developed accordingly.
The director's operational independence from the Inland Revenue will enable him to focus his efforts on the requirement that he contribute effectively to the reduction of crime. It is our intention that the director should operate the taxation system in a manner that is consistent with that of the Board of Inland Revenue. An important feature in the development of the Bill has been that a single, national and consistent taxation system should be maintained. The provisions in clause 318 cover that point in full and entitle the Board of Inland Revenue to access documentation and information that it considers appropriate in that respect.
Under the amendment, the director would be required to gain the board's authorisation before exercising his taxation functions. That would make the board responsible for the operation of the director's taxation functions, thereby restricting his independence and removing the line of accountability to the Secretary of State. That would limit the director's clear focus on contributing to the reduction of crime, and his freedom to operate within the guidance issued to him by the Secretary of State. It would be a needless bureaucratic stage in the process, as the Board of Inland Revenue can already be assured that the director's operation of the taxation function under clause 318 is consistent with its own functions.
Under amendment No. 478, which relates to inheritance tax and adopts a variation on the previous theme, the vesting of inheritance tax functions in the director would be done jointly with the board. The amendment would achieve little in practice. The purpose of clause 315(3) is to vest inheritance tax functions in the director when he has served notice on the Board of Inland Revenue of his intention. Clause 315(6) already provides that that does not divest the board, or an officer of the board, of that function. Providing for vesting to be joint with the director is, therefore, immaterial in providing for either party to be able to perform additional functions.
Mr. Hawkins: I may be anticipating a debate that we should have when we discuss clause 315 and inheritance tax. I apologise if the Minister feels that I am doing so. I do not want to stray out of order. However, it is surprising that in this part of the Bill we should be giving the director—who is trying to access
Column Number: 940ill-gotten gains—specific and detailed powers in relation to inheritance tax. Will the Minister explain the thinking behind that?
|©Parliamentary copyright 2002||Prepared 15 January 2002|