Proceeds of Crime Bill

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Mr. Hawkins: What my hon. Friend rightly says leads me to a further thought. In light of our increasing knowledge about the increasing complexity of the system, might the Minister be forced to review the compliance cost assessment that the Government must provide for all Bills? My hon. Friend and I might want to re-examine that in light of what he has just said.

Mr. Grieve: Perhaps the Minister would like to intervene or comment on that before I finish speaking. My hon. Friend is right, and I hope that the Minister will forgive us for raising the matter in this way. The Bill is Government legislation, and we want it to work, but the more I examine it, the more complicated the Revenue functions seem to be. The Minister may, however, say that the provision has not caused a problem in Ireland, which may be a compelling reason for not worrying about it.

Mr. Ainsworth: We spoke earlier about the need for a memorandum of understanding on how the Revenue will work with the director. The jobs involved must be

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done anyway. Therefore, regardless of whether Revenue staff do the routine jobs so as not to involve, and unnecessarily increase the number of, the people working for the director, the director will work the matter out in a common-sense way with the Revenue.

The hon. Gentleman should not minimise the issues involved. I should have thought that one of the most regular ways in which criminals try to legitimise their income is to set up front companies that employ people, pay statutory sick pay and do all the other things that companies must do. That is exactly how such activity goes on, and will be found out.

Mr. Grieve: The Minister is right, and I do not disagree with his analysis. However, he may agree that if a criminal sets up a front company for the purpose of laundering his assets, and the director cannot seize those assets under part 5 or the confiscation provisions in part 2, the mere fact of setting up a front company would normally imply that the criminal involved is prepared to pay tax in the ordinary way to the Board of Inland Revenue. However, we are discussing the director's use of taxing powers in order to tax money that in ordinary circumstances might be expected to escape the attention of the Board of Inland Revenue. I may have misunderstood the matter, but that is what I would normally assume lay behind the provision.

I accept that, as the Minister said earlier, as the director will focus on criminality and the proceeds of crime, he may turn his attention to a front business that is not only fuelled by ''funny money'' but does not pay tax properly. On the whole, history has shown that many people who engage in criminality do not pay their taxes, and try to minimise or evade tax generally, as well as having acquired their money unlawfully and illegitimately in the first place. I do not believe that there is a great deal between us, but if a business exists, the Board of Inland Revenue will try to tax it and will take all those factors into account.

Mr. Ainsworth: Yes, but the most relevant point is the focus. There are many small businesses in my constituency, and as long as they order their affairs so as not to draw undue attention to themselves, the Revenue will not single out a particular shop or small business that fronts a scam and launders money derived from it. However, the director may get there, because of other intelligence that he has. The main issue is the focus.

Mr. Grieve: The Minister is right.

I have a cottage on the River Thames, and when I am staying there, I occasionally notice moored in the local marinas very large pleasure craft that never seem to do very much. They change hands from time to time, and I do not suppose that I will be spilling the beans if I mention that there are anecdotal rumours that money is often laundered by acquiring and selling those large assets. Such transactions might generate capital gains tax, for instance.

Large pleasure craft—

Mr. Davidson rose—

Mr. Hawkins: Do they have drawing rooms?

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Mr. Grieve: I do not know, but as they are often described as gin palaces, I suspect that a drawing room is the last thing they would have.

Mr. Davidson: I was going to ask what the rate of exchange was between a cottage on the Thames and sheep and cattle? How many sheep and cattle did the hon. Gentleman's relatives have to steal to fund the purchase of his ill-gotten gain? Will the Minister consider whether his cottage can be reclaimed by the state?

Mr. Grieve: My family benefits from the fact that its more nefarious activities were brought to an end by the union of the crowns in 1603. I am glad to tell the hon. Gentleman that as a result of that of that union, the people in the borders who were not deported to Northern Ireland, or, subsequently, to America—and who were not hanged, either—succeeded in transforming themselves into legitimate business men. That happened such a long time ago that even I would find it difficult to distinguish, for the benefit of the hon. Gentleman, between the assets that I own that are derived from criminality, and those that have subsequently been lawfully acquired.

Mr. Davidson: Is that the case for the defence?

Mr. Grieve: I return to the debate on the clause.

The Minister has persuaded me that I must not interfere with statutory sick pay, maternity pay or student loans, although I will be interested to see how those provisions work in practice. However, I am conscious of my own ignorance, and if those who sit in the other place have greater expertise, they will be able to draw on our discussion to point out any deficiencies that they identify in this part of the Bill.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 317 ordered to stand part of the Bill.

Clause 318

Exercise of Revenue functions

Question proposed, That the clause stand part of the Bill.

Mr. Hawkins: The clause addresses the exercise of Revenue functions. Subsection (1) splits up the general Revenue functions and the Revenue inheritance tax functions, and my hon. Friend the Member for Beaconsfield and I have expressed concerns about the way in which the inheritance tax provisions operate. I do not want to reopen that debate, but I wonder why it is necessary to split those functions between separate paragraphs.

I also want the Minister to clarify something. Concern has long been felt about extra-statutory concessions made by the Revenue—as I know from my own work at the Bar, although I do not have specific expertise in that field. Subsection (3) rightly states that the director is bound by

    ''(a) any interpretation of the law which has been published by the Board''


    ''(b) any concession which has been published by the Board and which is available generally to any person falling within its terms.''

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Does paragraph (b) refer to all of what are called the extra-statutory concessions made by the Revenue, or is there some significance in the extra words? They appear to provide a condition that would be available to anyone who falls within the terms?

I ask that question because some extra-statutory concessions are made only to certain classes of persons. An example of that—which will be particularly familiar to my hon. Friend the Member for Beaconsfield, the hon. Member for Wellingborough (Mr. Stinchcombe) and me—is that extra-statutory concessions were adopted for many years in relation to practising barristers. That is the kind of thing that would always get the goat of the hon. Member for Glasgow, Pollok (Mr. Davidson).

Will the Minister tell us more about extra-statutory concessions?

Mr. Ainsworth: That is the one to pay for wigs and gowns. Once upon a time in the car industry, I enjoyed a sharp tool allowance; I did an honest day's work for my remuneration then.

Mr. Davidson: When you were a Whip.

Mr. Ainsworth: Clause 318 requires the director of the agency to apply the taxation system in the same way as the Board of Inland Revenue. He must apply the material published by the board on the interpretation of the law and the extra-statutory concessions. He must also take account of any other material published by the board. The important effect of that is the maintenance of a single, national and consistent taxation system. Without the provision, the Board of Inland Revenue and the director might apply different interpretations of tax law.

The clause also limits the delegation of taxation functions by the director to his staff, rather than to anyone else who provides him with services. It will send out the important message that the director will apply tax law in the same way as the Board of Inland Revenue. That reinforces the point that taxation will be applied fairly and equally to everyone.

The hon. Member for Surrey Heath mentioned his continued concern that inheritance tax is signified separately from other taxation provisions. That is a purely technical necessity. Inheritance tax has not been singled out in any way. The structure of current legislation is the reason why the Bill was drafted in that way.

Mr. Hawkins: I am grateful to the Minister. I accept his second point; I was simply asking for clarification about inheritance tax.

In connection with the extra-statutory concessions, I was fascinated to hear about the Minister's sharp tool allowance. Clearly, I must research that further. [Interruption.] I did not hear what the hon. Member for Glasgow, Pollok said, so I shall give way to him.

Mr. Davidson: You still don't get the point.

Mr. Hawkins: I am not sure whether the Minister fully answered the question about whether some extra-statutory concessions that do not apply generally would apply here. I understand that the director will work in exactly the same way as the Inland Revenue

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does at present. That is fine. That will be on the record in Hansard, and will help any person who wishes to rely on an extra-statutory concession in the future.

Question put and agreed to.

Clause 318 ordered to stand part of the Bill.

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