Clause 15.—(SUPPLEMENTARY.)

§ The Attorney-General (Sir Reginald Manningham-Buller)

I beg to move, in page 22, line 41, to leave out from the first "to" to the end of line 46 and to insert:

1. (i) the assets comprised in the acquisition or disposal and the consideration for the acquisition or disposal; and
2. (ii) the date and manner of the acquisition OT disposal. including any condition to which it was subject and the satisfaction or otherwise of any such condition.

§ Mr. Deputy-Speaker

With this Amendment can be discussed that in the name of the hon. Member for Crosby (Mr. Graham Page), in page 22, line 49, at end insert: Provided that Where the person on whom such notice is served is a solicitor who is acting or has acted for the person who may be chargeable to tax in respect of any transaction about which information is sought in the notice, he shall not, without the consent of his client, be required to give any further information beyond that referred to in subparagraph (a) of this Clause and the statement whether or not he has acted for his client in connection with the matters specified in the notice.

§ The Attorney-General

During the Committee stage we had a very full discussion of Clause 15 (5) on an Amendment moved by my right hon. Friend the Member for Flint, West (Mr. Birch). I do not wish—and I do not think the House would wish me to do so at this late hour—to cover all the ground that we covered in that debate.

I would, however, like to remind the House quite shortly that it is in the opinion of the Government essential, if Case VII is to operate, that the Revenue should have powers to obtain information of the character indicated in order to prevent tax evasion. My right hon. and learned Friend the Chancellor in his Budget statement said—I reminded the Committee of it, and I would remind the House of it tonight—that in assessing liability to a Case VII charge the Revenue will rely primarily upon the ordinary Income Tax return, which will 447 include a section for the return of chargeable matters under Case VII. It is important to bear that in mind.

The existence of a power by the Inland Revenue to check a return by seeking information from the agent of the taxpayer is likely to encourage the taxpayer to send in correct returns. The knowledge that his returns may be checked is likely to deter him from sending in incomplete ones. So Clause 15 (5) will have a deterrent effect. That, I believe, is its main value. I doubt whether in fact it will be necessary in practice to make much use of the power it gives to the Revenue; the important fact will be that those powers are there; and I hope the House will agree that it is essential that the Revenue should have some such powers.

Bearing in mind that for the purposes of Case VII what has to be found out is the date of acquisition, the price paid, what has been acquired, the date of disposal, and what has been disposed of, and for what price, it is obvious that the persons from whom to obtain information about these matters are those who have acted on behalf of the taxpayer, who have acted as his agents in carrying out such transactions. Under Clause 15 the Commissioners can only require information from the taxpayer's agent if it appears to them that the person is or may be chargeable to tax. That is the first condition which has to be satisfied. Under this Clause the Revenue cannot call for a return of transactions effected by an agent which can come within Case VII; they must have grounds for believing there is or may be a Case VII liability on the part of the particular taxpayer before they can make any inquiry, and their inquiry must be related to a named individual.

The first thing to find out is whether the person has acted as his agent in connection with acquisition or disposal, and that is provided for, as the House will see, by subsection (5, a). If he has so acted, then he may be asked for further information, and I will come to the question of what further information he can be asked for in a moment.

The point I want to make now is that for the purpose of checking a named taxpayer's returns it is just not enough 448 to find out someone has acted for him in connection with an acquisition or disposal and no more. I would like to stress that point in view of the Amendment tabled by my hon. Friend the Member for Crosby (Mr. Graham Page) which we are going to discuss with this Amendment.

Having said that in relation to that Amendment, I now come to the question of what information the Inland Revenue should be able to ask for. In the Bill it is defined as information relevant to the question whether the taxpayer is chargeable and information relevant to the computation of the tax liabilities, of the gain or loss.

I said during Committee that I felt that some of the fears expressed about this provision were due to the use of the word "relevant". There is always room for argument about what is or is not relevant, and I undertook to see if it was possible to define more precisely what the Revenue could ask for. It is as a result of that consideration that this Amendment is moved. It is only fair that I state that there is no difference in what the Revenue have wanted and want power to obtain. The difference is in the wording of the Clause, and I commend it to the House because of its greater precision.

Under it, the House will see, information can be asked for under two heads, and I will deal with them in turn. First, there is information as to the assets comprised in the acquisition or disposal and the consideration for the acquisition or disposal. If we are to check the liability to charge under Case VII, we must be able to find out what has been bought and what has been sold, and the prices. Under the second head, the Revenue will be able to find out the date and manner of the acquisition or disposal, including any condition to which it was subject and the satisfaction or otherwise of any such condition. Clearly, we must get the date of acquisition or disposal, for chargeability will depend on that. The Revenue will also want to know the manner of acquisition or disposal. Was it, for instance, in the case of land, by the acquisition or disposal of a freehold or a leasehold interest? It is also important to find out whether the acquisition or disposal was in pursuance of a condition of contract 449 and, if so, whether the condition was fulfilled, for that will affect chargeability to tax.

I hope that the House thinks that the Amendment is an improvement on what was originally in the Bill. It underlines the fact that the information required is simply of a factual character, and, further, it has the advantage that those from whom information is sought will not have to concern themselves with its relevancy but whether it comes under one or other of the specific heads set out in the Amendment. I do not for one moment believe that the Revenue would seek information to which under this part of the Amendment it was not entitled, but should it do so. then it will be open to the recipient of the request to refuse to give it without getting into any controversy about relevancy.

If there is to be any check on the taxpayer's return where it appears to the Revenue that there may be chargeability under Case VII, this, I submit to the House, is information which the Revenue must have power to obtain from agents who act on behalf of named taxpayers in the acquisition or disposal of assets. I desire to stress this and also to stress that there is no power to ask a bank as to what passed between the bank and its customer, no power to see a customer's bank account, no breach of the confidentiality of communications between the bank and the customer, but only power to find out what the bank has done in this field as an agent of the named customer. It is very important that we all recognise that that confidentiality of communications between bank and customer should be preserved. All that is sought is just the information, and no more than that is necessary, to check the chargeability under Case VII.

I turn to the position of solicitors, because fears have been expressed about it. Today The Timescarries a report headed "Move to defend solicitor's privileges". Solicitor's privilege is something quite new to me. It is, in fact, the client's privilege which protects communications between a solicitor and his client, not any privilege which attaches to a solicitor in any personal capacity. I think that it should be made clear that the concern which has been expressed by solicitors about this is not 450 concern on their own behalf but in relation to their clients' interests, and I think that that should be made clear at the very beginning of what I say on this issue.

Just as in the case of bankers and their customers, so in the case of solicitors and their clients, the Revenue are not concerned with, and cannot under the Clause as amended obtain, information as to confidential communications between solicitor and client. Communications made to and from a legal adviser for the purpose of obtaining legal advice and assistance with regard to litigation are protected, and the Revenue will not be entitled to get any information of that character, so that there is no question of any breach of that facet of legal professional privilege.

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Let us suppose that a solicitor has acted for a taxpayer in buying some land. There will be no question of asking what instructions his client gave him or what advice he gave his client. All that is required is the date of the contract of purchase, the amount paid, and the manner of acquisition, whether it was freehold or leasehold. No question of litigation will be involved and no question of privilege which ordinarily attaches where litigation is contemplated. Even where such privilege arises there is authority for saying that a solicitor cannot refuse to produce evidence unless the client was entitled himself to refuse to produce it in court.

I seek to emphasise what I said in Committee. There is, as I see it, no question here of seeking to secure information as to communications between client and solicitor. They remain privileged, and all that can be obtained is factual information as to what the solicitor has done as agent for his client in the acquisition or disposal of assets. This is somewhat analogous to the provision in Income Tax which has been in existence since 1842 in what is now Section 22 of the Income Tax Act, 1952. Under that provision every person, and that includes a solicitor, can be asked to make a return of any money or value or any income which he receives for which some other person may be chargeable to tax. He may be asked to make a return of what is received on behalf of all his clients, and when the 451 Royal Commission on Profits and Income was sitting I am informed that the Law Society made no representations with regard to Section 22.

I do not think it is possible to exempt one category or more than one category of agents from the scope of Clause 15(5). If then there is to be power to obtain information from an agent it must surely be from all kinds of agents, because if it were not so those exempted might expect an increase of business on chargeability to Case VII.

There is one further point with which I must deal in view of the article in The Timestoday. It is suggested that a solicitor might not be able to represent his client if the Inland Revenue prosecuted and if a solicitor was one of the main witnesses called by the prosecution. I do not feel very impressed by this contention, for the evidence required in such cases from a solicitor—and cases of criminal prosecution are very few—would be, as I have indicated, of a purely factual nature about which I think it most improbable that there would be any dispute. In fact there have been occasions in the past when solicitors for the defence have been called upon on subpoena to testify for the prosecution as to formal evidence and to produce documents. I do not think that there is very much in that point. However that may be, if the principle is accepted by the House, as I think it has been, that there must be power to check the taxpayer's return, I think it must follow that it must be a power to check with all agents. The Amendment defines more precisely what can be obtained, and for the reasons given I ask the House to accept it.

I conclude by saying that I think that a provision giving power to inquire, such as this, to the Inland Revenue should be properly subjected to close examination. I hope that what I have said will allay the fears of those members of the other branch of the legal profession who have felt, partly due to the use of the word "relevant" that the power given would be a power to inquire into matters relating to communications between a client and solicitor or solicitor and his client. I hope that I have made it absolutely clear that that is not wanted by the Revenue. It is not the intention that 452 the Clause should provide it. The intention—and the Amendment seeks to make that clear beyond shadow of doubt —is only to seek power to obtain factual information in relation to acquisitions or disposals done by an agent, including a solicitor, which may give rise to chargeability under Case VII.

I am sorry for taking up so much time on this, but I thought, in view of that article and the fears which I know have been expressed, it would be right, and the House would like me, to deal fairly fully—although, I hope, not too fully—with this Amendment.

§ Mr. Nigel Birch (Flint, West)

I am grateful to the Attorney-General for moving this Amendment. It is, I think, an improvement on the wording in the original Bill. It is an improvement in that it clearly defines exactly what information can be asked for. I wish he could have gone further and adopted the suggestion I made before the High Court order, but these words are acceptable and I am grateful to my night hon. and learned Friend for going as far as he has gone.

§ Mr. Graham Page (Crosby)

With great respect to my right hon. and learned Friend the Attorney-General, think he has made perfectly clear what he wants, but I cannot read this Clause 15 (5) to have such a limited extent. Clause 15 (5) seems to oblige a solicitor upon demand from the Commissioners of Inland Revenue to disclose the affairs of his client.

It is all very well for my right hon. and learned Friend to say that it is not desired to demand disclosure of communications between the client and the solicitor and that all that is required is a matter of pure fact. There can be no division between advice and fact in the relationship between solicitor and client. The solicitor advises on facts. He advises on documents. They are part of the transaction between the solicitor and the client. I have no doubt that the administrative difficulties applying i n collecting the short-term gains tax are great —

§ Mr. Callaghan

Could the hon. Member help those of us who are trying to understand the solicitors' case on this matter? What does he mean when he says that there is no difference between 453 advice and fact? If I am asked as a solicitor, "Did you sell on behalf of your client such-and-such a share and on what date?" the answer is "Yes, on such-and-such a date". Surely there is a difference between saying that and saying, Did you advise your client to sell this share?". What does the hon. Member mean by saying that there is no difference between advice and fact?

§ Mr. Page

If the hon. Member will allow me to develop the argument in my own way, I think I shall come to that point and I may be able to satisfy him. I cannot believe that this tax is so unlike any other form of taxation that it is necessary to have a special Clause of this sort in the Finance Bill which would set aside the constitutional right of the subject. My right hon. and learned Friend said quite rightly that this is not solicitor's privilege and has nothing to do with solicitor's privilege. It is the right of the subject, a right which I put as a constitutional right, to the privacy of legal services, not just the privacy of legal advice but the privacy of affairs between solicitor and client. I do not think that I am putting it on too high a plane.

It is of supreme importance to the proper administration of justice that the citizen should have the right to make what statements he likes to his solicitor, to seek what advice he chooses and that it should be confidential and should remain confidential. This has been recognised for a long time. I shall read a few sentences from Taylor on Evidence, an accepted text-book on this subject. It says: the rule is now well settled that, where a barrister or solicitor is professionally employed by a client, all communications which pass between them in the course and for the purpose of that employment are so far privileged that the legal adviser, when called as a witness, cannot be permitted to disclose them, whether they be in the form of title deeds, wills, documents, or other papers delivered, or statements made or of letters, entries or statements, written or made by him in that capacity. It continues: This rule equally applies, though the solicitor be employed in the characterߪof a conveyancer to draw deeds, or though the conversation relate only to the sale of estate…It extends to all communications between a solicitor and his client, relating to matters within the ordinary scope of the solicitor's duty". 454 That is well confirmed in Halsbury's Laws of England and in other textbooks.

First, I will clear up some fallacies which have arisen in connection with this matter.

§ Mr. Callaghan

I am not interrupting in any hostile manner. I think that it is important that we should try to understand the case which the hon. Gentleman is putting. Is he saying that the information 'which is now required is contrary to the definition he has read? If he says that, how does he square that with the returns which, apparently—I did not know this until today—a solicitor already makes under the Income Tax Act, 1952, to which the Attorney-General referred?

§ Mr. Page

If the hon. Gentleman will allow me, I shall come to that.

§ Mr. Callaghan

If the hon. Gentleman 'would answer now we should understand better as he goes on.

§ Mr. Page

The answer to the first part of the hon. Gentleman's question is that I do say that Clause 15 is a breach of the privilege of a client in his relationship with his solicitor. I say that it is a breach because it would require the production of documents, the production of facts, the production of communcations between solicitor and client which are at present protected from production.

§ The Attorney-General

My hon. Friend says "require the production of documents". I thought I had made clear that it does not require the production of any documents at all. All that is asked is that the solicitor shall state, "When did you buy this piece of land, and what price was paid for it?". No documents are asked for, and no information as to what advice he has given to his client or any communication which passed between him and his client is required.

§ Mr. Page

With great respect to my right hon. and learned Friend, he cannot ride off on that. In his own Amendment he requires the solicitor to state the date and manner of the acquisition or disposal, including any condition to which it was subject. 455 Surely, that is the contents of the document. If my right hon. and learned Friend is now saying that the solicitor will not be required to produce the document, that does not carry any weight with me. He will be required to state what are the contents of the document in saying what was the date and manner of the acquisition or disposal, including any condition to which it was subject. I say that that is a serious breach of what has been recognised as a privilege of the citizen in his consultations with his solicitor.

My right hon. and learned Friend said, quite rightly, that is not the solicitor's privilege. It has been said in a case that the privilege is the privilege of the client, not of the professional adviser. He said also that, if allowed, it would not be restricted to a solicitor, and, if the communications of a solicitor are to have privilege, then it should apply to all agents. This is made quite clear in the law as it now stands. It is only the communications between solicitor and client which are protected in this way, and this protection has never been applied to the relationship between, say, a doctor and a patient or a priest and the person who consults him. For the purposes of the administration of justice this has been applied, and applied very strictly in the past.

12.15 a.m.

I want to make it clear that this privilege does not afford protection to any communications between a solicitor and client which are in preparation of a fraud or a crime. If there is something of that nature in the communications, the solicitor is obliged to disclose it. I will again quote a passage from Taylor on Evidence, because I think it expresses the position very well, to show that the Treasury has sufficient powers under the existing law to get all the information it requires without the new Clause, Which is a breach of the privilege. Taylor on Evidence says: But the legal adviser can be asked whether the conference between him and his client was for a lawful or an unlawful purpose. If, either from his admission or from independent evidence, it should clearly appear that the communication was made by the client for a fraudulent or criminal purpose…the privilege does not exist, and he is bound to disclose the guilty project. 456 He is also bound to disclose the name of his client. The Treasury has sufficient powers already without altering the law, which is what the Amendment would do.

Great care has been exercised in the past to preserve this right of the citizen to privacy in his legal services. It was recognised in the Companies Act. It was recognised in the Borrowing (Control of Guarantees) Act. It was recognised in the Legal Aid and Advice Act. There are only three instances, one of which my right hon. and learned Friend mentioned, in which there has been any attempt to tamper with this privilege. The one which my right.hon. and learned Friend mentioned was Section 22 of the Income Tax Act, 1952, which imposes an obligation on solicitor's to supply information about taxable income passing through their minds. That is entirely different. Money is passing through the hands of the solicitor untaxed and he is required in the course of his business to disclose that to the Revenue.

The second instance is Section 414 of the Income Tax Act, 1952, under which the Special Commissioners can require information about transactions relating to the transfer of income of persons living abroad. In that case the Section has so many restrictions that it boils down to merely giving the name of the client.

The third example is the Trading with the Enemy Act, 1939, against which no one would complain. Any agent—not a solicitor, specifically—can be required to furnish the Custodian with information and documents. I think I can safely say that those are the only three occasions on which this privilege has been tampered with in any way.

There is here a conflict of public interest between the Revenue, on the one hand, and the proper administration of justice, on the other. The need for a few £s traced by this means is not worth the abandonment of what I believe is a constitutional principle. My hon. and learned Friend was quite right, although he scoffed at the example, when he indicated where it might lead. If a client has carried out some transactions on the advice of his solicitor, with the assistance of his solicitor, and if the documents have been drafted in the solicitor's office and the Revenue then thinks that he is chargeable to tax 457 and gives notice to the solicitor to provide the information, even though it be the information which is set out in the Amendment, the solicitor can be called as a witness to give that evidence and produce documents against the client for whom he has previously acted. It may occur that that client comes to the solicitor for defence in that case and finds that the solicitor is the chief witness for the prosecution. It is not impossible that under the Clause that could happen. It would be a choice theme for a plot for one of the court scene plays or films that frequently appear. Although the short-term capital gains tax will be difficult to enforce, it is not worth causing this breach of the rights of the citizen in connection with his legal consultations.

§ Mr. J. Grimond (Orkney and Shetland)

Arising from what has been said and without prejudging the issue, I wonder whether the Attorney-General could answer just one question. I understand that the Clause as drafted gives the Commissioners of Inland Revenue the right to ask for certain information from solicitors and other agents. If I understood him aright, the Attorney-General said that this did not confer any right upon the Commissioners to demand the production of documents. If there is dispute, if the Commissioners are not satisfied with the information provided by solicitors or the client's agents, do I understand that they have no right to ask that the documents in question should be produced?

I quite understand that if there is any question of fraud it would vitiate privilege. If, however, there is a simple dispute, is it the intention that the Commissioners—

§ The Attorney-General

I can answer straight away. The Clause gives power to the Inland Revenue to ask the solicitor or agent specific questions—for example, to ask the solicitor what was acquired and the date of acquisition. If the solicitor writes stating, that, say, three fields were acquired at such and such a date and gives the location of them, that is all that can be done under this provision. The Inland Revenue cannot go further unless proceedings are started for fraud, when the service of subpoenas may come into the question. 458 Under this provision, however, it is a power to ask the agent to supply information. The power does not extend beyond that.

§ Mr. Grimond

I am obliged to the right hon. and learned Gentleman. In fact, the whole question of subpoena'ing a solicitor to produce documents does not arise under the Clause?

§ Mr. Eric Fletcher (Islington, East)

I should like to say a few words in support of the Amendment put forward by the hon. Member for Crosby (Mr. Graham Page), because I rather detected from the interventions from the Front Bench that we have not entirely convinced all my hon. Friends about the merits of the Clause. I am encouraged to pursue the matter because I share the view of the hon. Member that a question of considerable constitutional importance is involved in the Amendment.

As the hon. Member said, we are faced with two conflicting public duties. One is the necessity of giving the Inland Revenue all reasonable power to prevent the avoidance of tax that is properly payable and the other is to maintain the important and cherished liberty of the subject freely to be able to communicate and discuss his affairs with his legal advisers without the risk of those confidential communications being disclosed.

I share the view, which is held, I am sure, on this side of the House, that it is the duty of everybody to do all he can to prevent any evasion of revenue laws. At the same time, we have to remember that for centuries the administration of justice has depended upon the fact that citizens are entitled to get legal advice upon all their affairs in the sure and safe knowledge that they can disclose matters in confidence to their legal adviser without the risk of their legal adviser, without their consent, having to disclose any information to third parties. If that were not so, the administration of justice could not continue and the liberties of the subject would be seriously affected.

It is part of the law of the country that nobody is guilty of an offence until his guilt has been proved. He is deemed to be innocent. In this law, as in other 459 realms of the law, there will be a number of borderline cases in which disputes will arise as to whether an offence has been or has not been committed.

This Clause, like sections of all Revenue Acts and a great many other Acts, will call for a good deal of careful investigation and examination, and people will be entitled to take advice as to what is lawful and what is not. The law in respect of the Revenue is no different from other aspects of the law. It is a serious matter to evade any revenue duty, but there are other crimes equally serious.

Murder is a serious crime. People on a charge of murder are entitled to have their defence put forward. They are entitled to legal advice. They are not to be convicted until they are proved guilty. There are numerous other offences. There is the Official Secrets Act, to which the Attorney-General is so devoted. Cases arise under that.

We could get this country into a sorry state if its citizens accused of offences, when in a position in which they thought they might be involved in disputes with the authorities, whether the police or the Revenue, were not able, in conditions of absolute confidence, to seek legal advice and to seek it without fear of disclosure to third parties.

§ Mr. Anthony Crosland (Grimsby)

My hon. Friend speaks of legal advice and suggests that it is under threat from this Clause. The Attorney-General has said that under no circumstances could advice be covered by this provision but simply factual statements. What is the relevance of what my hon. Friend is saying?

§ Mr. Fletcher

I am sorry that my hon. Friend does not appreciate the relevance.

§ Mr. Callaghan

We are doing our best.

§ Mr. Fletcher

I am sure that anybody who has had any experience of practice in the legal profession, whether as solicitor or as a member of the Bar, must know perfectly well that it is quite impossible to draw a hard and fast line between what is fact and what is advice.

§ The Attorney-General

I am not asking for anything which passes between solicitor and client. I am asking for facts as to transactions with third parties 460 conducted by the solicitor as agent for his client. It is the facts of the transactions with third parties that are required. I repeat again what I have said before. This Clause does not give power, and no power is sought, to inquire as to anything that passes between solicitor and client.

§ Mr. Fletcher

I know that the right hon. and learned Gentleman has said that, but in view of the answer he gave to the right hon. Member for Orkney and Shetland (Mr. Grimond), there is still a good deal of ambiguity. One of the right hon. and learned Gentleman's supporters said, when we discussed this in Committee, that he does not accept any assurances made in this House as to how any particular Statute will be interpreted.

What is far more relevant is that the Council of the Law Society, which is a responsible body consisting in large part of supporters of the present Government, feels acute and deep concern about this Clause, even though it has been amended in the way described by the right hon. and learned Gentleman. The members feel that concern not for their own protection but because, from their years of experience, they know that situations arise almost daily in which members of the legal profession are consulted about all kinds of matters, not on one specific transaction, but over a whole range of details of a person's affairs. That has been done deliberately, and people have been entitled to do it because of the absolute privilege which exists when they seek legal advice.

12.30 a.m.

Once there is any inroad into that privilege of the citizen to discuss matters freely with his legal advisers and give them information of facts on which advice may be tendered, there is a fear in the minds of the Council of the Law Society that solicitors will not be able to continue to practise their profession with the same freedom as they have done in the past, and there is also a fear that this inroad into the privilege of the citizen will lead to making it much more difficult for the administration of justice to be carried on, because be it observed that solicitors are not agents for the Revenue or for the police.

I have no doubt that if we lived under a complete dictatorship lawyers could 461 be made agents of the Revenue and the police. If we want that sort of society, we can have it. Some States have it. It is the type of society in which no citizen has any freedom at all, and no right to take legal advice, and in which there is a presumption of guilt rather than of innocence. We can have that kind of society, in which lawyers are made the agents of the Government with a duty to make disclosures about their clients' affairs to the Revenue, to the police, or to anybody else, but that is not the kind of society in which we have been living for the last two or three hundred years, and it is not the kind of society which corresponds with my concept of a free society.

I appreciate this conflict, but where there is this conflict it is of paramount importance to protect the liberty of the subject. I believe that all these powers which the Revenue want to enforce under this part of the Bill can be obtained—as, indeed, I think the Attorney-General recognized—largely by the powers which exist to require information from the taxpayer himself or from other agents.

I think that where there is this conflict the House would be making a serious mistake if it made what is widely regarded as a serious inroad into this protection of the citizen against the risk of confidential information communicated to a legal adviser being repeated without his consent to a third party.

§ Mr. Forbes Hendry (Aberdeenshire, West)

It is with great regret that I rise to criticise the opinion of my right hon. and learned Friend the Attorney-General. There is a great deal of concern among the legal profession in Scotland about the proposed Amendment, and I have been asked to support the Amendment in the name of my hon. Friend the Member for Crosby (Mr. Graham Page).

The effect of the Government Amendment is not what my right hon. and learned Friend says it is. What a solicitor is being called on to do is to give details of any acquisition or any disposal. The Clause as originally drafted mentioned the word "relevance", but this word has disappeared, and a solicitor is now being called on to give information about any acquisition or any disposal. He is being called on to give not only the date but the 462 manner of the acquisition or disposal, including any condition to which it was subject and the satisfaction or otherwise of any such condition. In other words, private and secret information between a solicitor and his client has to be disclosed to the Revenue, whether it has any relevance or not.

The law in Scotland on this subject is different from that in England, and goes back a long way. It was re-stated as far back as 1681 by Lord Stair in his "Institutions of the Law of Scotland". This is what Lord Stair states: Advocates, agents, factors, trustees are suspect witnesses for those who intrust them. But they are not obliged to depone to any secret committed to them. That has nothing whatever to do with legal advice but the secret communications between a lawyer and his client.

It is established law in Scotland that this is a privilege not of the solicitor or the advocate, but the privilege of the client which the legal adviser is not at liberty to disclose to anyone without the consent of the client. The whole principle was strongly stated in Dickson's work on evidence, which is still the standard work on evidence in Scotland. Dickson described it as follows: By a sacred and settled rule of law, communications between a party and his legal adviser regarding the subject of a suit depending or threatened arc secure from disclosure. That is a sacred and settled principle of the law of Scotland. The Act of Union preserved that principle of the law of Scotland for all time.

The present situation seems to be a question of whether the right of the citizen to commune with his legal adviser is to be weighed in the balance with the temporary advantage of a few £s for the Revenue. In the past it has been held essential in the interests of justice and good administration that there should be secrecy between a citizen and his legal adviser. Without that privilege it would be impossible for anyone to go to a legal adviser knowing that whatever he told him would not be given away. It is absolutely vital to the administration of justice that this privilege be continued.

I beg my right hon. and learned Friend to change his mind on this issue and to accept the Amendment proposed by my hon. Friends.

§ Sir B. Janner

Some hon. Members who have spoken are solicitors. I should like to begin by answering the question that has been asked as to who is backing the kind of opinion my hon. Friends and I are putting forward. There is nothing secret about the answer. It is the Law Society. This organisation does not exist for the purpose of protecting solicitors in fraudulent or similar transactions. On the contrary, the Law Society sees to it that the public interests are protected.

If the Law Society, in its wisdom, having considered all the circumstances, has come to the conclusions we are trying to put forward tonight, it indicates not that the Law Society wants any advantage for the legal profession but that it wants the public to be protected in the way they have hitherto been protected when consulting legal advisers. I would make that clear here and now.

There is not an hon. Member present who, when he goes to his solicitor, does not expect him to keep every single piece of information secret and not to disclose it even to the nearest person connected with the hon. Member. Do not let us have any misunderstanding about this. The question arising now is whether any hon. Member would be prepared to say that what he has hitherto regarded as the relationship which existed between him and his solicitor should be in any way altered.

I ask the House to consider this from that point of view. That prevails not only with every Member of the House but with every person who crosses the threshhold of a solicitor's office as a client, not matter how small or how large his case may be. It may interest the House to know that one of the first things a solicitor does when he trains an articled clerk is to tell him that in no circumstances must he disclose anything which comes to his knowledge within the office to any other person, no matter how close that person may be to him.

Having that in mind, I think the Attorney-General has to consider how far he is prepared to crash into that principle. There is ample evidence, as the right hon. and learned Gentleman knows as well as anyone in the House, of learned judges who have expressed 464 themselves in no uncertain terms about this. I could quote numerous references, but I do not intend to keep the House for any length of time. It is known to everybody. It is sheer nonsense for anyone to suggest that he does not realise that this constitutional principle has been established to such an extent that none of us would desire to have it interfered with in any way.

It is no particular gift to the legal profession. On the contrary, it makes the legal profession watch its p's and q's very closely on every occasion, even, for example, in the matter of disclosing a client's address. So in dealing with these Amendments I would like the House to realise that all the quips that come across the House are not really becoming on an issue of this kind. On the contrary, we are dealing with something which goes to the heart of the right of the individual as against an oppressive or potentially oppressive State or police force.

Those of us who have had a fair amount of practice know very well that often a client comes in and puts his cards completely on the table. It is within the knowledge of every hon. Member that judges very frequently tell a person who attempts to plead guilty that perhaps he had better consider his position and plead "not guilty" as it may be proved that he is not guilty. What all that implies must be clear to intelligent hon. Members who can think for themselves or have had occasion to consult lawyers.

What is being attempted here? Have we tested yet whether there is a need for any breach of this principle? Why should we anticipate that there will be need to break down this rule, which is a very essential rule from the point of view of protecting not the solicitor but the 'public? It is nonsense to say that because one is going to be asked to give particulars of the assets comprised in an acquisition, that will be the end of the matter. How can it be? If an action is taken, someone will be called to prove the case. Who will be called? It will probably be the solicitor who has given the information which has been requested of him. He will be under examination. Who can stop it? The judge will not be able to prevent him against 465 producing documents because it naturally flows from the information which he has to give that the documents would have to be produced particularly if anyone were attempting to deny particulars contained in them. The prosecution would call on the solicitor. How could that solicitor possibly appear for the person who is charged? It is unreasonable to expect this, and the Attorney-General knows it very well.

§ The Attorney-General

The hon. Member must not say that. It has happened on more than one occasion, as I said, that the solicitor acting for the defence has given evidence of a formal character, of a factual nature, for the prosecution.

§ Sir B. Janner

The Attorney-General, with his vast experience, knows very well that it is not a purely formal matter we are talking about. If there were any case, any action, against the client, it would not be a formal matter. With the greatest respect, I ask the Attorney-Genera, to think not of the days when he is the Attorney-General but of the days when he was himself practising in the courts and when he realised that his jab was to see to it that the person whom he was acting for was protected by himself as his adviser until he was found guilty. A lot of Members in this House are apt from time to time to make cynical remarks about the legal profession; they are wrong about it, because an enormous responsibility rests on a lawyer who is conducting a case on behalf of his client, and who is given information because the client knows very well that at no time will he disclose it to anyone else without consent. It is perfectly true, of course, that if there is any fraudulent intent, or if any fraudulent matter arises, that is an entirely different thing.

It may be that the solicitor has not participated in the transaction but gets knowledge of it because his client has told him what has happened, and may ask advice.

§ Mr. Millan

If that were the case, that would not be covered by the subsection because that would not fall under paragraph (a). It would not cover it.

§ Sir B. Janner

I do not agree it would not be covered by it. It would not require a considerable amount of ingenuity to bring that in. Assuming that a client had come in to seek advice about a contract, I think circumstances could arise in which the section could operate far beyond what has been indicated here.

The fact that the Attorney-General says in this House that it is not intended to mean something or another would not be admissible in a court, and everybody in this House knows that very well. We cannot bring HANSARD into court and show that the Attorney-General in his wisdom said on such and such a date that the subsection meant so and so. It is for the court to decide what it means.

I say respectfully to the Attorney-General, do not impose or put into a Bill something which will strike a blow at what he respects as well as 1 do, and that is the constitutional right of an individual to be protected by his solicitor, and to have protection from disclosing information or documents brought to the solicitor in his professional capacity. It may, of course, be just possible that, in a case or two, a difficulty will arise, but it is not worth driving a coach and four through a principle in order to obtain information from one or two pepole in cases.

I suggest to the Attorney-General that his best course is to accept the second of the Amendments, and if at the end of a year he finds it does not work, then to come again to the House to ask for the Amendment he wants. I am of the opinion that the Amendment would cover all the information which is necessary. The Attorney-General should retain the aspect of confidentiality which it is worth while keeping. He should accept the Amendment and, if it does not work, come back to the House next year and say so. That is better than inserting his Clause and, as it were, assuming the guilt of all those who come within its provisions. He should accept the Amendment. If it does not work and he returns to us next year, the House will give him what he wants.

§ Mr. Leo Abse (Pontypool)

It is not because the Law Society has expressed disquiet about the present position that 467 I rise to speak but because I feel disquiet about it. I realise that hon. Members who are not solicitors may regard this, as apparently some do, as a lawyers' lobby seeking some special rights, but that is clearly not the position, for if there is one lesson which any experienced solicitor has learned it is that his duty is to protect the individual from encroachment made by State agencies.

When one realises the importance of this principle, one is surprised that this sledge hammer is being taken to what is obviously a marginal matter. It is perhaps characteristic of a society which is so preoccupied with the making of money that it wishes to erode this long-established constitutional principle on a question of revenue, whereas if the same principle were applied we should have the police in a position to write for a descriptive account, serving a notice on a solicitor asking the date when an alleged murder took place or the time at which an act of the client took place. If the Revenue may demand a descriptive account, what is to prevent the National Assistance Board from demanding from a solicitor the address, purely descriptively, of an errant husband for whom the Board is looking in connection with maintenance proceedings? If a man has had an accident, what is to prevent the Ministry of National Insurance—

§ Mr. Speaker

Order. The hon. Member must direct his observations to the matter which we are discussing.

§ Mr. Abse

I am pointing out that an encroachment is being made by the Inland Revenue upon a long-established principle and that this is opening the door for every other State agency to do likewise. It is no use the Attorney-General saying, "I am asking only a simple matter—when did the contract take place?" That could be a very complicated matter. Every solicitor knows that there are innumerable disputes to decide when property actually passed. One person may say one day and another person may say another day. A solicitor would be compelled to give a great deal of information in answering that question.

I point out to my hon. Friend the Member for Cardiff, South-East (Mr. 468 Callaghan) that those who are used to this sort of procedure know full well the problem of being able to distinguish between facts and advice. Does the Attorney-General seriously suggest that in all transactions the solicitor could simply give the date when the property passed? He said that all that is being asked is certain conditions, but these may have to be spelled out from prolonged correspondence going back over a number of years.

In order to provide information to the Inland Revenue a whole series of letters may have to be submitted. Would those letters be entirely free advice or speculation? Would they be confined to specific conditions within a contract? We realise that this cannot be brushed aside in the way the Attorney-General has brushed it aside by saying that all that is required is a simple form answering "Yes" or "No" and supplying a date. These will be complicated matters and all the evidence that might come into them might have to be presented to the Inland Revenue. I would resent that I should have to become an agent of the police or of a Ministry or the Inland Revenue. Many of us who are jealous of our great tradition of the liberty of the subject are by no means appeased by the Attorney-General's suggestion that this requires only a simple form.

Assuming that it was a complicated transaction involving speculation as to the date when the contract was made, would not a solicitor who had to appear in court be subject to cross-examination on these matters? Is it not inevitable that he would have to say what his client said to him on such-and-such a date, to spell out the conditions and the time of the contract? It is abundantly clear that not enough thought has been given to this Amendment. It is inescapable that more information would have to be given to the court than the Attorney-General has suggested.

We oppose this because we are jealous of the liberties of the subject and we are concerned that no State body should be able to start using a profession as spies or agents of the Civil Service. I urge the right hon. and learned Gentleman to give another thought to this matter. It is well known that the law as it stands is sufficient to give protection against fraud and that solicitors 469 have too much regard for themselves and are under sufficient discipline within the profession not to lend themselves to this type of thing.

What the Attorney-General's proposal is likely to bring about is that people will go to where they think the provision can be evaded. If a man has any doubt about the secrecy of a transaction he is likely to go to a solicitor in a part of the country remote from the solicitor whom he usually engages because he thinks that that will mean evasion. What will be done by this provision will be not to deal successfully with the evader but to embarrass the whole solicitor-client relationship.

We plead that an important constitutional right should never be eroded even if it is a matter of administrative convenience. It is always because it is administratively convenient that principle is eroded. It is eroded because it does not fit in with some bureaucratic Civil Service mind. Everything that we in the profession have done in the past that we regard as important has been done because we have been able to stand up for democratic rights. When we are faced with a society in which the bureaucratic attitude proliferates more and more it is essential that we take a stand. Unless we do so all our liberties seep away. This is an important one because it is one which protects ordinary citizens from serious encroachments by the worst forms of State bureaucracy.

§ The Attorney-General

It might be for the convenience of the House if I reply to the arguments advanced by my hon. Friend the Member for Crosby (Mr. Graham Page) and others who have spoken on this matter. I listened with interest to their speeches, although I am afraid I could not agree with them for a number of reasons.

My hon. Friend the Member for Crosby outlined perfectly accurately the legal professional privilege which attaches when there is litigation or when litigation is contemplated. He read a passage from Halsbury which deals with that situation. He referred twice to the fact that that kind of privilege is necessary when there is litigation contemplated or threatened for the proper administration of justice. I do not quarrel with 470 him at all about that. That is clearly the case, and I say to him that if he will study this Clause carefully he will find—and I am sure be able to satisfy himself—that it in no way invades that legal professional privilege.

Secondly, he asserted that it meant a serious breach—

§ The Attorney-General

I will deal with the speech of the hon. Member for Islington, East (Mr. Fletcher) later. I am dealing first with my hon. Friend.

§ Mr. Fletcher

I hope the Attorney-General will forgive me, but I think he has said something which is inaccurate. He said that this privilege applied only in case of litigation.

§ The Attorney-General

I did not say that. Those were not my words. If the hon. Member would be courteous enough to allow me to go on I shall come to his speech. I said that my hon. Friend had outlined perfectly accurately the privilege which attaches when litigation is contemplated and he said twice that it was necessary for the proper administration of justice. I went on to say, and the hon. Member for Islington, East may not have caught it, that in my submission to the House this provision in no way invades that privilege.

My hon Friend asserted that the power given by this Clause as we hope to amend it would enable the Inland Revenue to find out what he said were facts and advice in relation to what had happened between the solicitor and his client. I am not asking the House to accept any assurance from me, but I say that if he will consider the wording of this Clause and the Amendment he will not find any wording in the Amendment which would justify the request for any such information, and it has been deliberately worded in that way. If any such request were made, the solicitor to whom it was made would be perfectly entitled to refuse it. There is no question here of finding out what passes between solicitor and client. I hope, despite the observations of the hon. Members who have spoken to the contrary effect, that on reconsideration of the wording of this Clause they will see that there is not a peg on which that contention could hang in the wording. What can be asked for, and only asked for, is as to facts 471 relating to acts done by the solicitor as an agent in connection with the acquisition or disposition of assets, that is to say, acts done with third parties.

I cannot agree that it is wrong that a solicitor should be required to give information about that. I do not feel that that involves a serious breach of a constitutional right. The objective is to provide the information under the specific heads which are given here. In fact, solicitors have to produce conveyances, which give a great deal of this information, for the purposes of Stamp Duty. The trouble about dealing with transactions in relation to land is that the liability to a Case VII charge does not depend upon the date of the conveyance but upon the date of the contract. If it is such a serious breach of constitutional right to disclose the subject matter of a contract and the date of its execution, it is astonishing to me that, for so many years, this information has been later revealed without objection by production of the conveyance.

Mr. Graham Page: I have restrained myself from interrupting my right hon. and learned Friend, but he mentioned a few sentences back that this dealt only with information when the solicitor has been dealing with third parties. Could he, please, give an undertaking about what is meant by things like consideration? It may not be a money consideration. It may be family consideration. And what of the manner of acquisition, too? If the solicitor is acting for a family and the transaction is between members of the family, as indeed it may well be in these tax matters, may he not be forced to give information under this Clause as amended?

§ The Attorney-General

I find it a little difficult to visualise that one member of a family will seek to make a speculative gain out of another member of the family. [HoN. MEMBERS: "Oh."] I find it somewhat difficult to visualise. As I said, this is dealing with information simply for Case VII, the speculative gains tax. I stress that condition (a) has first to be satisfied, that the solicitor will be asked to state whether he has acted on behalf of the first-mentioned person in connection with any acquisition or disposal of assets by that person. 472 That is a named person, and it is asking him to say, under (a), whether he has acted as agent. If he has acted as agent for the taxpayer in the disposal or acquisition of assets, he must have been acting as agent in the disposal to or acquisition from a third party. In all these cases, we are concerned with information as to transactions with third parties by a solicitor acting as agent. I think that that does appear quite clearly from the language, and it is not capable of any other interpretation.

The hon. Member for Islington, East spoke a great deal about legal advice and dwelt to some effect upon not taking any assurances from me. I am not asking the House to take any assurances from me. I ask the House to consider the wording of the Amendment, which is very different from and much more precise than that contained in the Bill as originally drafted. I suggest to the hon. Gentleman that, when he has applied his mind to this carefully, and reconsidered it in the light of what I have said, he will come to the conclusion that there is nothing in (a) and (b), as we propose to amend it, which entitles the Revenue to ask anything at all about legal advice. I can only say that that is my view. There is no intention to ask about legal advice. Whatever advice may or may not have been given is wholly irrelevant to the question of chargeability to Case VII tax.

My hon. Friend the Member for Aberdeenshire, West (Mr. Hendry) drew attention to Scottish law and referred to the opinion that solicitors in Scotland have to keep secret any secret committed to them. Then he went on to say that that was when a suit was depending or threatened. If a solicitor buys some land on behalf of a client, there is no suit then depending or threatened. All we want to know, and all we are seeking to ask for, is details of a transaction so far as they relate to chargeability under Case VII.

The hon. Member for Leicester, North-West (Sir B. Janner) made a speech which dealt to some extent with questions of professional etiquette. He talked about how it is impressed upon the youngest solicitor not to discuss a client's affairs outside the office. I agree. The hon. Gentleman went on to talk 473 about legal professional privilege. I can only repeat what I have said before in the House. I would not support an invasion of the communications which pass between solicitor and client, whether they relate to facts or to advice. That is not what is being asked for. I can only give the assurance that we have most carefully considered the matter. The Amendment of my hon. Friend the Member for Crosby in page 22, line 49, would not enable the Revenue to have a cross-check on the taxpayer's returns. Our Amendment merely gives us what we ought to have to be able to get to cross-check and it does not enable the Revenue to ask for any more.

I want to deal with the question of what would happen should there subsequently be court proceedings. I repeat that this provision does not give the Revenue any power to call for the production of documents. It provides, like the provision relating to the return under Section 22, for the giving of information. Much has been said about professional privilege, but it is rather curious that when Section 22, to which I referred earlier, which had been on the Statute book since 1842, was under consideration by the Royal Commission, no representations were made to the Royal Commission by the Law Society to the effect that it was a breach of legal professional privilege.

As regards court proceedings, no reliance is placed on Clause 15 (5). The information that the solicitor sends in answer to specific questions will not be evidence against his client if his client is being prosecuted for a tax fraud. The documents that have come into existence, if there is a prosecution, may be producible on a subpoena duces tecurn.I repeat that I cannot believe that, if there was a prosecution, there would be any dispute as to the date of the contract or the acquisition or the amount of the price paid—the consideration.

I think that there was a case in 1954 where this very thing happened. The solicitor's evidence constituted a vital link in proving the case for the prosecution. The solicitor was called to give evidence on subpoena. That did not inhibit him from acting for the defence, because it was recognised that he was compelled to produce the document.

474 Dealing with production on subpoena, the solicitor cannot claim privilege himself and he can refuse to produce the document only if his client could refuse to produce it.

§ Sir B. Janner

Does not the learned Attorney-General realise that, before he calls for the production of a document, the information that he seeks from the solicitor would be necessary? It is on that information that he would call for the production of the document and institute the prosecution.

§ The Attorney-General

If the solicitor replied that he shad not acted for this named client in the acquisition or disposal of assets, or if he replied that he had acted but that he had no information to give about it—he might have no information; records sometimes get destroyed—that would be the end of the matter. If he gives the information, and in the unlikely event of a prosecution—prosecutions are very few—he could be called upon by subpoena to produce it. Indeed, a subpoena might be served upon him to produce all documents of this character without a return being made under this provision. It is necessary to make it possible to check the returns. I cannot see that any exemption for a particular category of agent is necessary.

§ Mr. Fletcher

May I ask one question, which arises inferentially from the argument in today's The Times? It is there assumed, and it has been assumed for the purposes of this debate, that even without the Amendment the Clause would apply to solicitors. It is not so stated specifically; it has been assumed. The Attorney-General will realise that it could be argued that any such intention would be so contrary to precedent as to make it arguable. Can he give his opinion whether, without the Amendment, the Clause applies to solicitors?

§ The Attorney-General

I have no hesitation in saying that the Clause applies to all persons, whether solicitors or whatever other description attaches to them, who act on behalf of named taxpayers in connection with any acquisition or disposal of assets by that named taxpayer.

§ Mr. Callaghan

I hoped that the Attorney-General would end his remarks by appealing to the Committee to reach a conclusion on the Amendment. Apparently, there are still hon. Members who wish to speak on it, but I cannot believe that new arguments remain to be developed at this stage.

I rise for one reason. Everybody taking part in the debate so far has been a solicitor or barrister. As they have all been speaking with a view to protecting my interests as a citizen or client, it might not be a bad idea if one of the solicitors' clients was allowed to say a word. I have listened to both sides of the argument without much preconception about it, except this. On the whole, I am disinclined on principle to agree with the Attorney-General. I start on the natural assumption that he is wrong. To that extent, therefore, I was biased towards those who spoke in favour of the Amendment.

One thing that distresses me is that I find myself agreeing with the Attorney-General against my hon. and learned Friend the Member for Kettering (Mr. Mitchison), and this is most distressing for me. At least, it shows that there is a division of opinion between the lawyers in the House and the rest of us. On the whole, the rest of us are not disposed to make nearly as much of this as the lawyers are.

The hon. Member for Crosby (Mr. Graham Page) said something that, I thought, was absolutely true. There is clearly a conflict of interest and public duty. Having listened to the hon. Member's speech and to the speeches by my hon. Friends the Members for Leicester, North-West (Sir B. Janner) and for Pontypool (Mr. Abse), no one can say that they do not regard this duty as extremely important and serious and one that they want to take properly. Therefore, none of us should sneer at it or attempt to denigrate it.

I do not speak in that spirit, but I am bound to say that in view of the breaches in this principle—I use the words of those hon. Members—which have been made so fair without, apparently, impairing this delicate relationship between client and solicitor, I cannot believe that the production of these simple facts will endanger the whole fabric of our constitutional lives.

476 What is required is a simple piece of information. On the basis of what the Attorney-General said, I take it that it is open to a solicitor to refuse to go beyond the provision of information. If he does so, as I understand the right hon. and learned Gentleman, he cannot be required to produce anything beyond the information that is set out. [Interruption.] I know that my hon. Friend the Member for Leicester, North-West takes a different point of view, but I am speaking as his client. I am delighted that he seeks to preserve my interest so carefully, but I do not think I want it looked after quite as much as all that.

If I go to an accountant and ask him to sell some shares for me, he has to disclose it. If I go to a solicitor and ask him to sell shares for me, on the basis of the Amendment he will not have to disclose it. I am obliged to the solicitors for looking after me, but I see no reason why, if I ask a solicitor to sell shares, he should not have to disclose it any more than an accountant does.

I suppose that solicitors come much more closely into the question of land. I stress some of the points made by my hon. Friend the Member for Pontypool. On the other hand, as my hon. Friend the Member for Sowerby (Mr. Houghton) has reminded me, solicitors apparently already deliver to the valuation office particulars of contracts and sales. They have apparently, in all the tens of thousands that take place, encountered no violation to their consciences nor any betrayal of the interests of their clients in Riving, information to the valuation office about the amount for which the house was sold and the date of the contract.

We have spent 1½hours on what the lawyers undoubtedly believe is an important principle, but having listened with the best will in the world, and with the utmost desire to disagree with the Attorney-General, I find myself in agreement with him. If this matter is forced to a Division—I hope that it will not be—he and I will have to march through the Lobby side by side.

§ Mr. Dingle Foot (Ipswich)

I profoundly disagree with my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), and I am much disquieted 477 by the speech of the Attorney-General. The right hon. and learned Gentleman referred to the privilege of the solicitor when litigation is contemplated, and said that these provisions in no way invaded that privilege. He knows perfectly well that the privilege of the legal profession goes far wider than when litigation is contemplated.

All sorts of people take legal advice about all kinds of matters from both sides of the profession when there is no question of litigation. There are all sorts of matters on which they need to be advised and to which privilege attaches. This subject goes far wider than the matters to which my hon. Friend the Member for Cardiff, South-East referred. Clause 15 (5) (b), even as amended, states that what is required of the solicitor or the agent concerned is that he shall …furnish information in his possession… That means any information in his possession. It means information which has come to him from clients. It is the essence of the legal profession, whether solicitors or members of the Bar, that, when clients consult them, everything those clients tell them is completely protected and wholly privileged. This principle is being invaded by the Clause.

§ The Attorney-General

Would the hon. and learned Member mind reading these words with those it is proposed to insert? He would then see that the information is information as to the matters specified in my right hon. and learned Friend's Amendment.

§ Mr. Foot

Certainly. And the information the lawyer has received on these matters is information he has received from his client, something which his client has told him but which he is

§ Mr. Millan

Does this not have to be read in conjunction with subsection (5) (a), and is not the definition contained in it the crux of the matter? Is this not a matter of interpretation?

§ Mr. Foot

There is no escape from the words of the Clause. The solicitor is firstly, under (a), to state whether he has acted on behalf of the first-mentioned person in connection with any acquisition or disposal of assets by that person; After he has made that statement, he has to go a step further and furnish any information in his possession. This is not just a question of furnishing dates or describing the assets. He has to furnish any information in his possession —and the important words are "any information"—which has been communicated to him by his client. I do not want to elaborate this at this late hour, but an extremely important principle is involved here, and I believe that the privilege not of the solicitor but of the client is of far more importance than the convenience of the Inland Revenue.

§ Sir Henry d'Avigdor-Goldsmid (Walsall, South)

I beg to move, in page 22, line 49, at the end to insert: Provided that the Commissioners of Inland Revenue shall supply to the first named person a copy of the notice at the time it is served. This Amendment should not engender the same intense feelings as the last one. It refers to the notice to be served when the Commissioners have reason to suppose that there has been evasion. The effect is that when such notice is served by the Commissioners on the agent, at the same time the person into whose affairs inquiry is being made shall also be informed.

I understand from my few years of service in the House that it is not possible for back benchers to draft any form of words, however intelligible, which is acceptable to the Government draftsmen. But I believe that the Amendment contains a principle which the Government are prepared to accept. In moving the Amendment very briefly, I hope that even if these words are not acceptable, effect will be given to the principle in a subsequent Bill.

§ The Attorney-General

My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) has moved the Amendment with commendable 480 brevity. He has suggested that it is impossible for a layman to meet the drafting requirements. I would point out that the difficulty of the wording in this case is the requirement that a copy of the notice is to be supplied to the first-named person at the time it is served. That seems to demand a contemporaneous act which it would be difficult to achieve. Therefore, I am afraid that the wording cannot be accepted. It is unusual to accept an obligation to give a notice of this kind. There are many provisions in the Income Tax Acts enabling the Revenue to obtain information, but there is not a single precedent for a requirement of this kind on the Statute Book.

Having said that, and being of the view that in many cases it would be undesirable for the power to require information to be accompanied by any requirement to notify the suspected erring taxpayer, on this occasion I can say with the authority of the Board of Inland Revenue, which is controlling the inquiry for information, that it will undertake that when it makes inquiries of solicitors and banks it will notify without delay the taxpayer concerned. Without any undertaking of that sort, the banks and the soliciors would, one would expect, themselves notify their 481 customers. But the Board of Inland Revenue is prepared to undertake to do that.

I think that that in substance meets the suggestion contained in my hon. Friend's Amendment. I do not think that it would be right or proper to create in the Statute Book a precedent of this kind which might be embarrassing on future occasions, but what I have said will be done, and that is what my hon. Friend wants done. Therefore, I hope that he will be able to withdraw the Amendment.

§ Sir H. d'Avigdor-Goldsmid

Might I take i: that that when my right hon. and learned Friend refers to bankers and solicitors he includes the other agents such as accountants and estate agents and other individuals who may be questioned in this connection?

§ The Attorney-General

Yes. Perhaps I ought to have mentioned them specifically. Dealing with the matter at this late hour, and particularly after the last Amendment, I had especially in mind the position of bankers. It will be notice to all the agents from whom information is sought.

§ Sir H. d'Avigdor-Goldsmid

It is satisfactory to learn that a feat which seemed impossible less than five minutes ago is now capable of achievement. In view of that, I beg to ask leave to withdraw the Amendment.

§ The Chief Secretary to the Treasury and Paymaster-General (Mr. Henry Brooke)

I beg to move, in page 25, line 17, to leave out from "and" to the end of line 20 and to insert: shall not apply to a claim for the year 1962–63 or for the year 1963–64, if the claim is expressed to be made on the basis that this section shall not apply; but

1. (a) subject to paragraph (b) below, a claim made by a person for any of those years on either basis (including a claim for the year 1961–62 made before the passing of this Act) may be superseded by a further claim made by him on the other basis within the time allowed for claims for the year 1963–64; and
482
2. (b) a claim may not be made for the year 1961–62 or for the year 1962–63 on the basis that this section shall apply, if a claim (not since superseded) has been made in respect of the same trade for a later year on the basis that this section shall not apply, nor may a claim be made for the year 1962–63 or for the year 1963–64 on the basis that this section shall not apply, if a claim (not since superseded) has been made in respect of the same trade for a previous year on the basis that this section shall apply.

(7) Where under paragraph (a) of subsection (6) above a claim made on one basis is, after effect has been given to it, superseded by a further claim made on the other basis, then (without prejudice to any other provision for adjusting tax) there may be made all such repayments of tax and assessments or alterations of assessments as may be necessary to give effect to the further claim in place of the clai