|Proceeds of Crime Bill
Vera Baird: Does the hon. Gentleman agree that the protection for the lawyer that is contained in clause 327 does not cover the mischief that might be caused? A client's information might be wrongly given out. In that case, the innocent client has been done an injustice that cannot be rectified. Although the lawyer is protected under clause 327, the injustice cannot be undone.
Mr. Grieve: I agree with that.
I do not wish to trot out platitudes, but the legal professional privilege exists for what have for centuries—which is a very long time—been considered sound public policy reasons, so it is particularly important that those who operate under
Column Number: 1164its constraints should have adequate protection from legislation that might criminalise them when they are morally blameless. That is why I commend the amendment to the Committee.
If, at a later stage of our scrutiny of the Bill, the Minister were to table an amendment that went some way towards meeting my concerns, I would be the happiest person in the world. However, at present, I wish to press my amendment to a Division.
Question put, That the amendment be made:—
The Committee divided: Ayes 5, Noes 14.
Division No. 30]
Mr. Grieve: I beg to move amendment No. 489, in page 187, line 41, at end insert—
The Chairman: With this it will be convenient to take the following amendments: No. 496, in page 188, line 18, at end insert—
(a) by a person to whom he is giving, or may be asked to give, advice on any matter relating to tax, or
(b) by a representative of such a person.'.
No. 497, in page 188, line 19, leave out 'subsection (8) does' and insert 'subsections (8) and (8A) do'.
No. 498, in clause 325, page 188, line 39, after 'adviser', insert 'or tax adviser'.
No. 499, in page 188, line 45, at end insert—
No. 511, in Clause 329, page 191, line 33, at end add—
(13) ''Tax advice'' means the preparation and submission of tax returns, advice on tax planning, representation and defence of taxpayers before authorities and courts and the provision of overall advice in the area of taxation and complementary accounting and legal services.
(14) ''Tax'' means any form of taxation imposed by the laws of the United Kingdom or of another territory outside the United Kingdom.'.
Mr. Grieve: This is a probing amendment. I will not seek to press it to a Division, but I wish to hear the Minister's views about a problem that was raised by those who provide tax advice.
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The amendments would extend professional legal privilege to a category of individual that has not hitherto enjoyed it. As a lawyer, it is perhaps my duty to try to do that—and it certainly appears to be my duty to ask the Committee to consider the matter.
The issue is simple. Members of the Chartered Institute of Taxation have serious concerns about aspects of the legislation. In particular, they are concerned that it will make it difficult for them to provide tax advice to clients, because it will be incumbent on them to notify NCIS if any information is communicated to them that might give rise to a suspicion that money laundering has taken place.
In a sense, that ties in with our earlier amendment about Hansard agreements. In the process of obtaining the Hansard agreement, the tax adviser may receive information that may lead him to think that NSIS should be notified. That is the same issue, but approached from a different angle. Let us suppose that a person is a tax adviser and the information or other matter comes to him in relevant circumstances and is communicated to him to obtain advice on a tax-related matter. Under the amendment, he would not commit an offence if he had not made a disclosure, albeit that the purpose of a disclosure would be such that he could notify the Inland Revenue to clear up his client's tax problems. I should be interested to hear the Minister's views so that the Committee will know the Government's attitude to the representations that they have received and why they consider that our proposals are not acceptable.
The Parliamentary Under-Secretary of State for the Home Department (Mr. Bob Ainsworth): The Bill is drafted in line with the precedent set under existing legislation. There is a legal privilege exemption under the clause whereby a professional legal adviser is not required to report his knowledge or suspicions that another person is engaged in money laundering if the information on which such knowledge or suspicion is based comes to him in privileged circumstances. That is set out more extensively under subsection (8).
The amendments are not desirable. Legal privilege is a well-established concept, the purpose of which is to protect the integrity of the legal system and the rights of individuals involved in legal proceedings. Legal privilege is therefore a special case and we are not persuaded of the case for an extension favoured by the hon. Gentleman. The usual functions of tax advisers will not fall within the regulated sector until after the implementation of the second European Community money laundering directive into United Kingdom law. Such advisers are not therefore currently subject to the money laundering regime under the Bill, except to the extent that they engage in regulated activities.
However, when the new directive is adopted, we intend that an order will be made under part 3 of schedule 6 to extend the definition of regulated activities under part 1 of the schedule, so that accountants and tax advisers will be caught by the clause. We expect the directive to be adopted early this year; it must then be implemented under United Kingdom law within 18 months. We are aware that the current draft of the directive contains a discretionary
Column Number: 1166provision that allows member states to extend legal privilege to accountants and tax advisers, giving advice to clients on their legal position under tax law. As the recital to the directive makes clear, that exemption is available only for directly comparable services. It was introduced because, in some European Union countries, accountants can represent their clients in a court of law and it was felt that, in those circumstances, they should be placed on the same basis and on the same footing as the legal profession.
We have considered the issue, but our thinking is not to take advantage of the discretionary provision. It would weaken the current requirements on UK professionals. We must bear in mind that tax advisers are among the front-line detectors of money laundering, and we do not want to do anything that would impact adversely on their responsibilities for that.
That is the Government's position. As the hon. Gentleman said, we have received representations and given thought to the provision. We do not think that the situation applies to our legal system in the way that it does in some European Union countries. We maintain our position, and I ask him to reconsider the amendment.
Mr. Grieve: I thank the Minister for his comments.
There is the slightest irony that at the time when successive Governments have, perhaps rightly, eroded the legal profession's monopoly on representation—we do not know quite where that will end up—we should keep legal professional privilege tied so closely to solicitors and barristers. I would not be doing my job properly if I did not indicate that I foresee circumstances in which one might end up with representation occurring before tribunals, which are not conducted by solicitors or barristers. That might happen sooner rather than later, and my profession might not welcome it. However, the Government should keep the matter under review.
I was interested to hear that accountants may represent their clients before certain courts in other European countries. I am not sure who is entitled to appear in a representative capacity before Inland Revenue commissioners. The Minister may know the answer, but I do not. I know that accountants may prepare cases for presentation before the Inland Revenue commissioners, but do they have any right to appear in front of them? Can the Minister answer that before the conclusion of our proceedings?
Norman Baker (Lewes): I am following the hon. Gentleman's comments with interest. Does he agree that the legislation would be best framed to ensure that it deals with the functions and individual discharges that are covered on any particular occasion, rather than the normal description that is applied to an individual?
Mr. Grieve: The hon. Gentleman makes a good point. Of course, over the past 15 years, the barriers between solicitors and barristers have broken down considerably. On the whole, that commended itself to Labour Members and to some Conservative Members, if not to members of my own profession.
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It has become apparent that is possible to see a solicitor or accountant for legal advice on tax matters. Indeed, some might argue that one would be better off getting legal advice on specialist tax matters directly from an accountant. There are issues of direct professional access to the tax Bar, which need not be done through solicitors.
However, there is little doubt that a consequence of the Bill is that any person who wants legal advice on a tax matter will be well advised to see solicitors and barristers, rather than discussing the matter with their accountant. That is especially the case if the person thinks that they might fall foul of the law if they did not follow the advice. Unfortunately, that situation is not unknown.
The Minister explained the Government's view. Oddly enough, that might have the unintended consequence of helping people in my profession, especially specialist tax barristers—there are not many of them—and solicitors at the expense of accountants and tax advisers in this discrete area. That is contrary to some of the long-term trends that have developed in this country, which, apparently, have been welcomed.
In light of that, I wonder whether the Minister will think about the issue. As I have said, this is a probing amendment. I am offering, on behalf of my profession, to give something away—that is something that we are usually accused of being unwilling to do. I believe that the issue should be considered.
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