Personal Service Companies (Select Committee Report)

Debate between Baroness Noakes and Lord Davidson of Glen Clova

Tuesday 17th June 2014 Lords Chamber

[Lord Davidson of Glen Clova (Lab)]

My Lords, we on this side welcome the report as a real contribution to the debate about the UK’s tax system and how the objectives of fairness and encouragement of enterprise can be better achieved. I congratulate the noble Baroness, Lady Noakes—

[Baroness Noakes]

I thank the noble Lord for giving way. I think that my noble friend Lord Stewartby was hoping to speak before the Benches opposite.

[Lord Davidson of Glen Clova]

In that case, I will sit down and oblige. With her usual courtesy and brisk efficiency, the noble Baroness runs this House as well as she runs her committee.

Terrorist Asset-Freezing etc. Bill [HL]

Debate between Baroness Noakes and Lord Davidson of Glen Clova

Wednesday 6th October 2010 Lords Chamber

[Lord Davidson of Glen Clova]

My Lords, the purpose of our amendments is to raise the broad issue of compensation and indemnity for consideration by the Committee. The suggested amendments have, as their provenance, the Australian terrorist asset-freezing regime. There are two principal parts to our proposed scheme: first, to indemnify persons from civil litigation for loss suffered as a result of having assets wrongly frozen when the person holding the asset has acted in good faith and without negligence, which includes protection from the Crown, needless to say; and, secondly, to compensate those persons who have suffered loss as a result of having assets wrongly frozen, when the person holding the asset has acted in good faith and without negligence.

The draft of the proposed amendment differs from the Antipodean legislation but follows the same approach as adopted in Australia. The position in Amendment 52 on indemnity is self-explanatory—namely, to exclude liability when the person has acted in good faith and without negligence in compliance or purported compliance with this part. It then sets out, perhaps a little inelegantly, how the various persons and institutions might be identified by reference to designation.

The second, related, aspect is compensation, set out in Amendment 46, which suggests a power for the Secretary of State to make orders providing for compensation when people have suffered loss as a result of an incorrect designation. The order may include various provisions, as is set out in the proposed amendment, on who can claim for an award, with which court the claim may be made, and so on. The phrase adopted,

“suffered loss as a result of an incorrect designation”,

would include persons incorrectly covered by a designation, such as someone with a similar name or the same name as the designated person—and US experience teaches us that that has become an increasing problem with terrorist-related issues. It would also include a designated person who has had their assets frozen incorrectly—for example, inconsistently with an applicable licence.

As I indicated earlier, we understand that the Government consider that there is sufficient compensation by way of a mechanism through appeal to the court. When I queried the Minister about this, I am not sure that I detected a complete response to our understanding. If my understanding is correct, one is in the position that the Appeal Court may make these orders, presumably by way of compensation. It would be helpful if the Minister could give some indication as to how it might be envisaged that such a process would work. It may be that it is seen as part of the judicial review process. Again, it would be helpful if it could be indicated how that might work.

The Government have also not included any particular compensation scheme in this Bill, but in so doing have distinguished the Bill from the Anti-terrorism, Crime and Security Act 2001, which provides a compensation scheme to be included with a freezing order. The proposal that is before the Committee in this amendment seeks to redress the dissonance between that Act and this Bill and to provide a transparent compensation scheme together with a proposed scheme for indemnity. That would avoid what might be called collateral damage from the operation of the asset-freezing regime proposed in the Bill. I beg to move.

[Baroness Noakes]

My Lords, I am sure that the Minister has “resist” written in large letters all over his speaking notes, but before he rushes to do so I shall add one example from the real world, which came to my party when we were preparing for the emergency Bill earlier this year. Our adviser at that stage, who was an eminent QC, gave us an example in relation to analogous legislation in which a company had been included on a blocked list because its shares had previously been held by a suspected person. Some months before his inclusion on this list, the person had sold his shares in the company on an arm’s-length basis and for value, but the company was nevertheless incorrectly included on a blocked list. It took a fair amount of time for the designation to be challenged and for the various other licences to be obtained, but in that intervening period the company suffered a considerable period of loss. My point in raising this is merely to say that there are real-world examples when loss can occur. We are not dealing with theoretical situations of safeguards to be included in the Bill. I hope that the Minister can give some reassurance to the Committee that remedies are available when that sort of situation arises.