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Confiscation Providing real results

Confiscation. Of all the areas of criminal litigation this is the one most likely to make clients want to pull their hair out. What should be a simple measure, taking the profit out of crime, has turned into a mass of complex case law with some very frightening possible outcomes. It may have been the case that all criminal lawyers could deal properly with all areas of criminal law but the Proceeds of Crime Act 2002 (POCA) even now, more than a decade after it came into force , is still troubling the Court of Appeal, the Supreme Court and even the European Court of Human Rights. It is not necessarily an area of general expertise for all criminal lawyers.

We are proud to say that at Rahman Ravelli we have expertise of POCA challenges in all of these Courts – a fact that most cannot boast. This is because we have historically always served our clients by putting in place early and effective strategies and fighting points that others have not even considered.

Why is POCA so harsh?

The policy behind the confiscation regime is said to be to remove the profit from crime. The complaint is that in fact it often feels like so much more – i.e. like a further punishment. This is mainly because of the effect of the statutory ‘assumptions’. Many defence lawyers find that, in some cases, the Financial Investigators (“FI's”), i.e. those officers who start the confiscation process have lost sight of the true purpose of confiscation. The Home Office Asset Recovery Incentivisation Scheme (“ARIS”) means that 50% of the proceeds of confiscation monies are split 3 ways between the Court Service, the prosecution & investigators.

We believe that it is frankly offensive for an agency to have a financial interest in the outcome of a sentencing process. As long as ARIS is in place we will continue to have a policy of overly aggressive confiscation claims; i.e. made because they can be, rather than should be. Given current attitudes we expect ARIS type schemes to be around for many years yet, see e.g. National Audit Office Report on Confiscation Orders, Dec 2013. There are also the structural facets of the Act which is where the everyday battles are fought daily - most especially in the areas of tainted gifts, hidden assets, third parties and the concepts of benefit and available amounts in ‘criminal lifestyle’ cases. How do I Defend Against Such Formidable Odds?

The answer is; EMPLOY EXPERTISE. The reality is that confiscation claims are started by FIs. Some are good, some are bad, all have an agenda and none are lawyers. The trick is to hone in on the forensic weaknesses in the Prosecutor’s s16 Statement and apply pressure. There has been a trend in recent case-law against confiscation orders which are in truth out of touch with the “on the ground” reality. The case of R v Waya is just one example where the Supreme Court considered that proportionality was a concept to be read into POCA, no matter what the precise wording of the Act.

There are many other examples.

We cannot begin to deal with all those areas here but we do set out just 2 areas where true expertise, diligence and early preparation can make a difference in areas that seem otherwise hopeless at first sight.

Company Profits

Our professional clients are often very concerned about this aspect. R v Sale [2014] 1 WLR 663 was a case where the defendant had provided gifts to an employee of Network Rail with a view of securing work for his company. The Confiscation Order reflected the total value of the income from the work gained not just the profit. This was consistent with the case law on “benefit”. The Court of Appeal, relying on proportionality arguments, reduced the figure to the pure profit element. However, the opposite result was reached in another case; R v King [2014] EWCA Crim 621 3/4/14. In that case a trader was selling cars as private sales in order to avoid providing guarantees or warranties as might be required under a business arrangement. The entire income from 58 sales, i.e. the turnover of the business and not just the profit, was the basis of the benefit and the final Order. The Court of Appeal held that, despite the customers being happy with their cars, the business itself was “founded on illegality” and the Order was upheld. When defending in a case like this it can be seen that it is appreciating the difference between these two cases from the very outset that makes all the difference when push comes to shove.

See also R v Ahmad and Ahmed [2012] 1 WLR 2335 (CofA, March 2012). This was a carousel fraud case where a number of companies were involved in circular trading. In the confiscation process the Judge held that the benefit was not to be restricted to the £12.6m that the Revenue lost, but to all of the monies which passed through the companies; this led to a startling figure of over £92m benefit for each defendant! The Court of Appeal reduced the amount to the profit element – £12.6m.

The Supreme Court recently ruled on the point in an important judgment ([2014] UKSC 36) which in some ways reverses the Alice in Wonderland reality that had come to dog the issue of “benefit”. How a defendant's “benefit” was assessed was – and remains – the operation of s76 - “a person benefits from conduct if he obtains property as a result of or in connection with the conduct”. Thus a group of individuals manage to obtain fraudulently £1m in e.g. VAT repayments from HMRC – each has that benefit; £1m. What the Supreme Court has done in Ahmad is to stop the Crown from recovering more than £1m – it has effectively capped recovery to the amount of the overall real benefit. The problem is, that does not mean there is some kind of apportionment between the defendants – an Order could still be made requiring each of them to pay £1m. The possibility of injustice is obvious. Say the last named defendant, a minor player, happens to have a family home which he inherited and is valued at £1m. The prosecution could recover that and all the co-defendants are relieved from paying anything. The Court recognised this and thought that defendants had to accept unfairness in the process because they are convicted criminals. We see huge problems ahead.

Hidden Assets

There has long been an understanding that if the Court concludes that a defendant has “hidden assets” then the confiscation order must be in the full amount of the benefit. This follows the case of Telli v Revenue & Customs [2008] where Flaux J. said that: “the court must make a confiscation order for the full value of the benefit and has no discretion to order confiscation of a lesser sum”. This is simply not the case. The Appeal Court in R v Ahmad found that if Flaux J. had the benefit of R v McIntosh [2011] 4 ALL ER 917 he would not have come to the same conclusion, in particular at para 15 of that judgment. The upshot is that though lack of disclosure or evidence by the defence will make a defendant's job more difficult but “it may not be impossible for him to do so. Other sources of evidence, apart from the defendant himself, and a view of the case as a whole, may persuade a court that the assets available to the defendant are less than the full value of the benefit”.

And Finally

Confiscation Brief

No other area of sentencing, or indeed criminal law, demands the high level specialism that confiscation work requires in order for the best job to be done properly. Confiscation is complex and not well understood by all. At Rahman Ravelli we quite simply know how to do it.

Rahman Ravelli has published an Information Brief on Confiscation. Click here to download the full document.

Contact our Asset Recovery, Confiscation and Restraint Department if we can be of any assistance.

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