Confiscation – available amount

This article considers what is meant by a defendant’s ‘available amount’ and explains some of the rules the court must follow in determining the ‘available amount’.

In confiscation proceedings against a convicted defendant the Crown Court will ordinarily have to separately determine two figures – the ‘benefit’ obtained by the defendant and his ‘available amount’.  The court will then order the defendant to pay an amount equal to the lower of these two figures (see s7).

This article is based on the confiscation provisions of Part 2 of the Proceeds of Crime Act 2002, PoCA 2002, which apply in England & Wales.  Slightly different rules apply in Scotland and Northern Ireland.  In earlier confiscation legislation the ‘available amount’ was referred to as the ‘amount that might be realised’.

 

The ‘available amount’ is not the amount available

Like a lot of expressions used in confiscation, ‘available amount’ is defined by PoCA 2002 and has a specific meaning which is not the same as the meaning of the expression in everyday English usage.  A defendant’s ‘available amount’ is not simply the amount he has available to pay a confiscation orderSection 9 of PoCA 2002 defines ‘available amount’ as the total of the values (at the time the confiscation order is made) of all the free property then held by the defendant minus the total amount payable in pursuance of obligations which then have priority, and the total of the values (at that time) of all tainted gifts.

Typically a defendant’s ‘available amount’ is the total of all his assets less any liabilities secured on those assets, plus the value of any tainted gifts.  Take a simple example:  John and his wife jointly own their home which is currently valued at £300,000, there is an outstanding mortgage currently of £260,000 on it, John has £1,000 in a bank account in his own name, he owns shares quoted on the London Stock Exchange which have a current value of £12,000, he owes £15,000 on credit cards, and he has £80,000 in a pension scheme (which he cannot currently access as he is aged only 45), five years ago he gave £10,000 to his son Jake.  Let’s assume that for confiscation purposes John has a ‘criminal lifestyle‘.  What is John’s ‘available amount’?

John’s ‘available amount’ is £43,000.  This is made up of £20,000 as his half-share of the equity in his home, the £1,000 in the bank account, the shares worth £12,000 and the £10,000 gift to Jake.  The mortgage is taken into account because it is secured on the property and so reduces the value of John’s interest in the house, see s79(3).  The credit card debts are not secured on any asset and so are ignored.  The pension scheme has a realisable value of nil because John cannot access it at present (see R v Chen [2009] EWCA Crim 2669). The value of the gift to Jake is added in because it is a ‘tainted gift’ (see s77).

[NOTE: Since this article was written the circumstances in which a person may access monies in a pension scheme have changed. If, under current legislation, John were able to access a sum of money from his pension scheme then that sum would form part of his available amount.]

Let’s assume that the court has determined John’s ‘benefit’ to be £100,000.  The court will order John to pay £43,000 (because this is his ‘available amount’ which is lower than his ‘benefit’) and can initially allow him up to three* months to pay (see s11).  In default John may have to serve an additional term of imprisonment of up to 5 years*, because the amount does not exceed £500,000* (see s35(2A) PoCA 2002).

[NOTE: *The time to pay period was reduced to three months, from six months, by s5 Serious Crime Act 2015; the maximum default sentence in relation to an amount of £43,000 was increased to 5 years, from 18 months, by s10 Serious Crime Act 2015.]

In practice John will have difficulty paying the £43,000 because the only money he has readily available is the £1,000 in the bank account and the £12,000 he can raise from selling the shares.  He may need to sell the house in order to pay off the confiscation order in full.  He should talk to his solicitor about seeking further time to pay and about requesting reconsideration of the ‘available amount’ if the house and the shares cannot be sold for the full amount of their valuation.

 

Establishing the ‘available amount’

In law the burden is upon the defendant to satisfy the court that his ‘available amount’ is less than his ‘benefit’ (see s7 which says “if the defendant shows that the available amount is less than that benefit . . .”).

In practice the prosecutor will normally supply information about the defendant’s ‘available amount’ in his s16 statement.  The defendant may feel that the information supplied by the prosecutor is incorrect or incomplete, but it is up to the defendant to supply the correct information.

If the defendant fails to supply information about his ‘available amount’ to the court, or the court is not satisfied that the information supplied by him is correct and complete, then the court might simply make an order that the defendant should pay the whole amount of his ‘benefit’.  Indeed in the case of R v Barwick [2000] EWCA Crim 3551 the Court of Appeal went so far as to say “once the benefit has been proved, it is permissible and ought normally to be the approach of the court, to conclude that the benefit remains available until the defendant proves otherwise”.

That was exactly what the English courts did in the case of Mr Barnham, R v Barnham [2005] EWCA Crim 1049.  Mr Barnham ultimately appealed to the European Court of Human Rights contending that the burden placed upon him to satisfy the court of his ‘available amount’ involved a breach of his human rights, but the European Court found against him.

 

When the evidence is unsatisfactory

However it does not follow that in every case in which the court is not satisfied that the defendant has made a complete and accurate disclosure of his ‘available amount’ the court will make a confiscation order in the full amount of the benefit.

In the case of McIntosh v R [2011] EWCA Crim 1501 the Court of Appeal said, “there is no principle that a court is bound to reject a defendant’s case that his current realisable assets are less than the full amount of the benefit, merely because it concludes that the defendant has not revealed their true extent or value, or has not participated in any revelation at all  . . . The court may conclude that a defendant’s realisable assets are less than the full value of the benefit on the basis of the facts as a whole.  A defendant who is found not to have told the truth or who has declined to give truthful disclosure will inevitably find it difficult to discharge the burden imposed upon him.  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.”

It appears therefore that a Crown Court judge has some scope to weigh the evidence as a whole in coming to his own determination of a defendant’s ‘available amount’ where there is uncertainty about the true position.

 

Inadequacy of available amount

Where, after the confiscation order has been made, it transpires that the defendant’s assets are less valuable than previously thought or, on realisation, they fail to produce the expected value, then the defendant may request the court to adjust his available amount.  That will involve the court reconsidering the entirety of the defendant’s available amount – so that the values all the defendant’s assets taken into account in the confiscation order are reconsidered by the court.

 

Appeals

It is possible for an appeal to be made against a confiscation order on the basis that the Crown Court judge has made an error in his determination of the defendant’s ‘available amount’.

There is a recorded case, R v Lemmon [1991] EWCA Crim 1, in which a confiscation order was quashed on appeal when a professional residential property valuation obtained after the date of the confiscation hearing showed that the defendant’s ‘available amount’ had been overstated.  However that decision may be specific to its facts.  In particular it appears that in that case “the figures put as the value of his realisable assets were unknown to the appellant until the day of the hearing”.  Ordinarily a defendant will be made aware of the prosecution’s assertions regarding his ‘available amount’ in advance of the Crown Court hearing, as they will be set out in the prosecutor’s s16 statement.

In the case of R v Davies [2004] EWCA Crim 3380 a prosecution valuation of property (which proved to be an over-valuation) was not challenged at the confiscation hearing.  Subsequently a professional valuation was obtained in a substantially lower figure and an appeal was lodged against the order.  In the Court of Appeal defence counsel indicated that the valuation had not been challenged due to an oversight on his part.  The Court of Appeal considered, at paragraphs [11] to [14], that the Crown Court judge had been misled as to the value of the property and it amended the defendant’s ‘available amount’ and hence the amount of the confiscation order.

As a result of amendments made to the Criminal Appeal Act 1968 by s140 Coroners and Justice Act 2009 it is now open to the Court of Appeal to remit confiscation cases to the Crown Court for re-hearing.  However it would be unwise, I suggest, to assume that a failure by the defence to carefully consider the defendant’s ‘available amount’ at the time of the Crown Court hearing could always be remedied on appeal.

David

(Note: There are a number of issues which could be relevant to a defendant’s ‘available amount’ in particular cases which it is not possible to deal with in a relatively short article such as this.  Appropriate professional advice should be sought in each individual case.)

14 thoughts on “Confiscation – available amount”

  1. I have a case coming at the end of the month, confiscation hearing I need some advice, whether my property can would be affected, the property is in my sole name but the case is my wifes.

    1. Chris
      You are asking a question about the law. I am not a lawyer – I am an accountant. You need to get advice from a lawyer.
      If a confiscation order is made against your wife that will require her to pay a specified sum of money to the court by a specified date. It will not confiscate any of her property (or yours).
      But if she fails to pay on time then the court may take measures against her property & property belonging to anyone to whom she has made a tainted gift.
      It may be argued that she owns a part of property which is registered in your sole name (so that property could also be subject to court action).
      Discuss these issues with a lawyer.
      David

  2. Where a confiscation order has been received on a pension pot, what tax implications are there in regard to this? It would not be classed as an unauthorised payment, but would pension regulations still apply here and the courts would only receive the net?

    1. Susannah

      You raise a very interesting point – to which I can only give a somewhat unhelpful answer.

      It seems to me that the pension ‘pot’ is an asset which in PoCA 2002 would be described as ‘free property’- see sections 82 & 84.

      Insofar as the convicted defendant has (in the legal sense) an ‘interest’ in the ‘pot’ then it is ‘realisable property’ of his – see sections 83 & 84.

      The value of the convicted defendant’s ‘interest’ in the ‘pot’ is the value of his ‘interest’ in it – see section 79.

      My understanding is that HMRC do NOT have any ‘interest’ in the ‘pot’ but that a tax liability will often arise for the convicted defendant if the ‘pot’ is paid over to him.

      My understanding is that the pension fund manager has to deduct tax from the ‘pot’ before paying it over based on a PAYE code.

      The confiscation order is an order requiring the convicted defendant to pay over a specified sum of money by a specified date – but it does not ‘confiscate’ anything & it does not, of itself, require the convicted defendant to realise any specific assets. So I anticipate the normal pension regulations will apply to the realisation of the pension ‘pot’.

      However it seems to me that s9 PoCA 2002 requires the ‘available amount’ to be based on the gross value of the ‘pot’.

      Therefore the court could well be requiring the gross amount from the convicted defendant even though he may only receive the net.

      To quote Mr Micawber, “result misery”!

      If the court cannot be persuaded to take the tax to be deducted at source into account when making the confiscation order, then the best option may be for the defendant to return to court after he has paid over the net & make an application for his ‘available amount’ to be recalculated & reduced under s23.

      David

  3. Prosecution decreed my benefit was the bonus I paid my wife less the tax. (£40,000). That’s OK. Also 50% of the pay I received which was £80000 over 2 years. Total £120000. This is the gross figure. Should not the tax I paid come off this. Please advise.

    1. John
      Without knowing the detail of your case, the specific offence(s) of which you were convicted, and the basis on which the benefit was computed, I cannot say anything useful. Talk to the lawyers who acted for you and ask them if it would be possible & sensible to appeal.
      David

      1. Cps ordered a confiscation order for 600 pound cash they found with me and also in regards to my car. However my car is on finance can they still go through with the order.

  4. Can anyone please assist ?
    I divorced my husband 10 years ago, although we did continue living together.
    During the entirety of our relationship the property has always been in my name alone ( as the finances came from me / family which I can show ).
    However, the court have now ruled that my ex husband should have been entitled to a 50 per cent share in my assets and awarded a confiscation order in that amount.
    If I simply do not sell my property to pay the order what will happen please ?
    My property has been restrained for in excess of 18 months so can it automatically be seized and sold without my consent?

    1. You need to get legal advice from a solicitor who understands confiscation law. The court may have made a “determination” regarding your ex-husband’s interest in the property. If so, you should have been notified in advance of the hearing and would have been entitled to be legally represented at that hearing to put forward your evidence concerning the history of the property and its ownership. If a determination has been made you may be able to appeal against it.
      If the court did not make a “determination” then you still need legal advice. The court may have concluded that your ex-husband has made a “tainted gift” to you. If so you may be required to repay the value of the tainted gift.
      Get proper legal advice now – don’t wait until further legal proceedings are started to sell the property against your wishes.

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