A defendant will be liable for confiscation proceedings where he or she has been convicted of an offence in the Crown Court and either the prosecutor or court has determined that a confiscation hearing would be appropriate, or where he or she has been convicted of an offence in the Magistrates’ Court and is committed to the Crown Court for consideration of a confiscation order, at the prosecutors’ request.
When considering a confiscation order against a convicted defendant under the POCA, the court must determine as follows:
- whether the defendant has benefited from the criminal conduct and, if so, what benefit has been derived; and
- the amount of the defendant’s realisable assets available to settle a confiscation order (the ‘available amount’).
The court will then make a finding of the recoverable amount under the confiscation order, which will be the lesser of the benefit derived by the defendant from his or her criminal conduct and the available amount. The court will also specify the time in which the defendant is to pay and, upon failure to pay, the term of imprisonment the defendant is to serve.
If the available amount is less than the total benefit that the defendant derived from the criminal conduct, then the difference will effectively remain as an outstanding debt to the state. If it can later be shown that the defendant is in possession of assets that may be used to settle this outstanding debt, then the prosecutor may apply to reopen the confiscation proceedings.
The purpose of UK confiscation legislation was considered by the Supreme Court in R v Waya  UKSC 51. In particular, the court in this case considered whether the lower courts had gone too far in certain decisions by breaching the principles laid down in article 1 of Protocol 1 of the European Court of Human Rights (ECHR) (A1P1), which protects individuals from state interference with their possessions, and the conditions and principles necessary to justifiably do so. The case concerned the purchase of a flat by the defendant, using a combination of legitimate funds and funds that the defendant had obtained by deception from a mortgage lender. In calculating the criminal benefit to the defendant, the first instance court deducted from the then market value of the house an amount proportionate to the legitimate funds that were used by the defendant to purchase the property. The Supreme Court did not agree with this approach, stating that the POCA bestowed a discretion on courts that allowed them to ‘mould a confiscation order to fit the facts and the justice of each case’, and that the POCA should be construed strictly in a manner that avoids violation of A1P1. The court therefore decided that judges should take a proportionate and common-sense approach, assessing the true benefit to the defendant and avoiding punitive confiscation orders that are disproportionate to the actual benefit obtained by the defendant. Section 6(5) of the POCA, as amended in 2015, places this decision on a statutory footing, providing that the court must consider the extent to which it is proportionate to make the defendant pay the recoverable amount, and must only make a confiscation order if proportionate.
The decision in Waya was applied in R v Axworthy (Liam)  EWCA Crim 2889. The Crown conceded that a confiscation order for £22,010 (representing the value of a Land Rover that the defendant fraudulently reported stolen, and in respect of which the defendant made an insurance claim) should be quashed. The vehicle had later been recovered near the defendant’s flat in Ibiza, meaning that a confiscation order for the total value of the car would be disproportionate to the benefit obtained by the defendant. Courts must now only grant confiscation orders that reflect the true financial benefit obtained by the offender.
When calculating benefit, no deduction is made for costs incurred in the perpetration of the fraud (R v Chahal  EWCA Crim 816).
Where multiple defendants jointly obtain a benefit from criminal conduct, each individual defendant is separately liable for the whole amount of the benefit, and confiscation orders must be made against each defendant for the whole amount. However, each individual confiscation order will only be enforced to the extent that the sum in question has not been recovered in satisfaction of another confiscation order against one of the other defendants. In short, a payment by one defendant of an amount due under the confiscation order should go to reduce the amount payable by the others (R v Ahmad (Shakeel)  UKSC 36).
When ascertaining the defendant’s benefit from his or her criminal conduct, the court must first ascertain whether or not that defendant has a ‘criminal lifestyle’. This is defined in section 75 of the POCA and means that the defendant has:
- been convicted of one of a number of specified offences set out in Schedule 2 of the POCA, including fraud, money laundering, bribery and drug trafficking;
- engaged in a course of criminal activity (ie, been convicted of a number of offences within a defined period); or
- committed an offence over a period of at least six months, and benefited from that conduct.
If the court determines that the defendant has a criminal lifestyle, the court must make certain assumptions in calculating his or her benefit. These are that all property transferred to him or her and all expenditure met by him or her in the six years preceding the date of conviction, as well as any property held by him or her after the date of conviction, represent the benefit he or she has obtained from his or her criminal conduct. Section 10 of the POCA provides that these assumptions can be displaced if they are shown to be incorrect, or that a serious risk of injustice would result from proceeding on the basis of these assumptions.
If the defendant does not have a criminal lifestyle, the court must decide whether he or she has benefited from the particular criminal conduct in question. If so, the court must then calculate the benefit from that specific conduct (section 8 of the POCA).
Where the benefit from the defendant’s conduct has been obtained by a limited company that is under the defendant’s control, the court may, in limited circumstances, be invited to ‘lift’ or ‘pierce’ the corporate veil and attribute some or all of that benefit directly to the defendant. An example of such action being taken by the court is where a corporate structure has been deliberately used to conceal the benefit resulting from a crime (R v Seager  EWCA Crim1303).
The available amount is the total value of the defendant’s ‘free property’, minus any priority obligations that have been satisfied (section 9 of the POCA). A priority obligation is either a fine or an order following a previous conviction, or a preferred (ie, secured) debt as defined by section 386 of the Insolvency Act 1986. The defendant bears the burden of proof for showing that the available amount is less than the benefit figure. If no sensible explanation has been provided as to what happened to the proceeds of an offence, a judge is entitled to find hidden assets in an amount equal to the full benefit figure (R v Saben  EWCA Crim 575).
‘Free property’ is any property, including all real or personal property wherever located, money, choses in action and intangible property, in which the defendant holds an interest. It also includes the value of any ‘tainted gifts’ (ie, transfers at undervalue made to third parties after the relevant offence was committed or, where the defendant has a criminal lifestyle, within six years of the date the relevant offence was committed).
Variation of a confiscation order
The POCA provides for four circumstances in which a confiscation order can be varied:
- the benefit can be reconsidered if new evidence of the defendant’s benefit becomes available (section 21 of the POCA);
- the available amount can be reconsidered if there is evidence to suggest that it was originally under-assessed (section 22 of the POCA);
- the order can be varied owing to the defendant’s means being inadequate to meet the confiscation order (section 23 of the POCA); and
- an order can be made in the defendant’s absence if he or she absconds (section 29 of the POCA).
A prosecutor is able to make applications for a variation order under sections 21, 22 and 29 of the POCA, and either the defendant or the prosecutor may make an application under section 23 of the POCA. In each case, the parties can consent to a variation without a hearing where there is no dispute. For a contemporary example of a confiscation order being varied, in June 2018 the Financial Conduct Authority successfully applied under section 22 of the POCA to increase the amount owed under a confiscation order by Benjamin Wilson (who was convicted of fraud in 2014) from £1 to £31,905.33. The increase to the available amount was owing to Wilson receiving funds left to him after his mother’s death in 2015.
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