§ 8. Mr. Hugh Jenkinsasked the Chancellor of the Exchequer if he will introduce legislation to make it an offence for professional advisers, deliberately and through negligence, to misinform their clients on the effects of taxation and other measures.
§ Mr. DiamondEvery attempt is made by way of publicity to ensure that professional advisers get correct information about tax measures. I am not responsible for the advice they ultimately give.
§ Mr. JenkinsDoes my right hon. Friend agree that in a number of cases close companies are being advised that shortfall tax is payable to the full and they cannot retain for development purposes? Is it not the case that the regulations provide for tax-free retention for development purposes? Will my right hon. Friend make that widely known?
§ Mr. DiamondI am grateful to my hon. Friend for drawing this to my attention. I have no information of cases where that kind of misinformation has been given. My hon. Friend is quite right in saying, as has been explained here many times, that the needs of the business, both current and future, must be taken fully into account in determining the shortfall.
§ Mr. Iain MacleodDoes the right hon. Gentleman agree that if such advice, to use the words of the Question, was given deliberately and negligently it would be an offence anyway without further legislation?
§ Mr. Diamond"Deliberately and negligently" is a curious concept, if one looks at the words very carefully. If the advice is given negligently, I should imagine that the client has a claim for damages. If it were given deliberately and negligently, I cannot think what goes on in the adviser's mind.