Category Archives: Fraud

Fraud

The meaning of “dishonesty” in English criminal law

Legal wig copyright David Winch 2014
What is meant by “dishonesty” in English criminal law? When considering the meaning of dishonesty the criminal courts of England and Wales until now often referred to a case decided last century. Recently in the case of Ivey v Genting Casinos (UK) Ltd (t/a Crockfords) [2017] UKSC 67 (25 October 2017) the UK Supreme Court reconsidered the meaning of dishonesty – and came to some new conclusions.

 

The two-stage ‘Ghosh’ test

Until October 2017 the leading case on the meaning of dishonesty in English criminal law was R v Ghosh [1982] EWCA Crim 2. In that case, decided in 1982, the Court of Appeal determined that there was a two-stage test for dishonesty. The first stage was based on an objective criterion and the second stage was based on a subjective criterion. The two stage test was put in the following terms:-

“In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.

If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did.”

So until October 2017 criminal courts operated on the basis that not only must the conduct of the defendant be dishonest by the ordinary standards of reasonable and honest people (the objective test) but the defendant himself must have realised that he was acting dishonestly by that standard (the subjective test).

 

The subjective test

What was implied in Ghosh, was that a defendant was entitled to say, “I did not know that anybody would regard what I was doing as dishonest” and if he was believed he should be acquitted of dishonesty (as the subjective test was not satisfied).

But the Supreme Court has now criticised that approach, saying that “It has the unintended effect that the more warped the defendant’s standards of honesty are, the less likely it is that he will be convicted of dishonest behaviour”.

The new judgment means that it is still necessary for the jury in the Crown Court or the magistrates in the Magistrates’ Court to reach conclusions about the actual state of mind of the defendant – but only insofar as this relates to the defendant’s state of knowledge or belief as to the facts.  The Supreme Court has now said that criminal courts should no longer ask themselves whether the defendant himself realised that he was acting in a way which ordinary people would consider to be dishonest.

 

The new legal position

So instead of the Ghosh test, when dishonesty is in question the court must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The question is not whether that belief is reasonable – the question is whether it is genuinely held.  Once his actual state of mind as to knowledge or belief as to the facts is established, the question whether his conduct was honest or dishonest is to be determined by the jury or magistrates by applying the (objective) standards of ordinary decent people.

There is no longer any requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.

One consequence of this is that the definition of “dishonesty” is now consistent between criminal and civil law in England and Wales.

 

An example

Suppose a person is newly arrived in England and he has come from a country in which all public transport is free.  He gets on a bus in London and on arriving at his destination gets off without paying.  He is charged under s3 Theft Act 1978 with dishonestly making off without payment.  But was he dishonest?

The issue is ‘Did he genuinely believe that no payment was required?’.  If he did then he has not been dishonest and should be acquitted.  If, on the other hand, he did know that payment was required then he was dishonest by not paying.

But this issue concerns the defendant’s belief about the relevant facts – the issue is not about his understanding of what constitutes “dishonesty”.  That is the change in the law as a result of the Supreme Court’s ruling in October 2017.

 

Contacting us

Our contact details are here.

David

(Note: This article applies to matters arising under the provisions of the criminal law in England and Wales.  Appropriate professional advice should be sought in each individual case.)

Bank account frozen

BanksFrom time to time I am contacted by people who have found their bank account frozen by the bank without warning or explanation.  Perhaps the account holder discovers this when he attempts to use a debit card, draw cash from an ATM, use online banking, or visit his bank to pay money in or take it out.

What should the customer do and what can he expect to happen?

 

Contact the bank

The first thing to do is to contact the bank and ask for an explanation.  The bank might be rather evasive in response – perhaps referring to ‘technical difficulties’ – or the bank may refer the customer to a specialist department (such as the fraud department) – or the bank may hand over a pre-printed leaflet about money laundering.  But the bank are unlikely to provide a full explanation about what is happening or when the account will be unfrozen.

If the bank won’t tell the account holder what is going on the likelihood is that someone at the bank has flagged up the account for possible ‘money laundering’.  In other words someone at the bank (or the bank’s computer system) has noted what appears to be unusual activity on the account which might be connected to proceeds of some sort of crime.

If that is the case then it may be helpful if the customer very swiftly supplies to the bank further information, explanations and, if possible, documentary evidence in support of an innocent explanation for any unusual recent transactions.

Also, if there is a particularly urgent need to have the account unfrozen – for example where the account is a business account and it is necessary to pay employees’ wages or a supplier almost immediately – tell the bank about the urgency.

The bank will not disclose which transactions have triggered their action or what suspicions they have, so the customer will be left guessing how he can best put the bank’s mind at rest.

But that further information needs to be supplied as quickly as possible, preferably the same day – delaying for a couple of days will probably be too long.

 

Inside the bank

What is happening inside the bank is probably that the customer’s account (or accounts) will have been referred to the bank’s anti-money laundering or anti-fraud department for consideration of whether a Suspicious Activity Report (SAR) should be made to the National Crime Agency (NCA) by the bank’s Money Laundering Reporting Officer (MLRO).

If the MLRO decides that there is a valid basis for a suspicion of money laundering (which is very widely defined) then an SAR will promptly be submitted to the NCA.  The SAR will ask the NCA to give consent for the bank to unfreeze the account.  Once that SAR is submitted matters will be largely out of the bank’s control – which means that nothing is likely to be achieved after that time by the customer supplying further information, or making a complaint, to the bank.

But the bank will not normally tell the customer whether it has made an SAR or when the SAR was submitted.

Once the bank has submitted an SAR to the NCA the account will remain frozen until either the NCA have replied to the bank authorising the bank to unfreeze the account, or the ‘notice period’ has elapsed without the bank receiving any response at all from the NCA.

The ‘notice period’ is seven working days starting from the day after the bank submits the SAR to the NCA.  So, for example, if the bank submitted an SAR on Thursday 9 June 2016 the ‘notice period’ would end on Monday 20 June.

In practice however the NCA aim to respond to these consent requests before the end of the ‘notice period’.  If the NCA are told by the bank that there is a particular urgency they will attempt to respond particularly swiftly (which is one of the reasons the customer should tell the bank if there is a particularly urgent need to have the account unfrozen).

If the NCA require further time to consider the matter they will respond to the bank by refusing consent.  Once that happens the account will remain frozen until the ‘moratorium period’ expires.  The ‘moratorium period’ is 31 days starting with the day on which the bank receives refusal of consent from the NCA.

So, for example, if the bank receives refusal of consent on Thursday 16 June 2016 the last day of the ‘moratorium period’ will be Saturday 16 July.  The account should then be unfrozen on the next working day.

[UPDATE: The Criminal Finances Act 2017 included legislation which allows a court to extend the ‘moratorium period’ by up to a further six months (an additional 186 days).  This is now in force.]

During the ‘moratorium period’ the NCA will continue to consider the position and may at any time give the bank consent to unfreeze the account.

If the NCA do not give consent then the bank should unfreeze the account once the ‘moratorium period’ has expired unless in the meantime the authorities have obtained a ‘restraint order’ from a Crown Court judge.

If a ‘restraint order’ has been obtained from a Crown Court judge then copies of that order are served promptly on the bank and on the customer (and perhaps also on others, such as the Land Registry).  A ‘restraint order’ will normally freeze all the assets of the customer indefinitely.  There is more information about ‘restraint orders’ HERE.

A customer who is served with a copy of a Crown Court ‘restraint order’ should seek advice from a solicitor experienced in such matters immediately.

 

What can the customer do?

The bank ‘s customer will not know whether the bank has submitted an SAR to the NCA, when the SAR was submitted, or what response has been received from the NCA, if any.

Because of this the customer will not know when the ‘notice period’ or the ‘moratorium period’ are due to expire.

Aside from very swiftly providing additional information and documents and telling the bank about any particularly urgent need to have the account unfrozen, as already mentioned, the customer will be able to do little more than check with the bank every day whether his account has been unfrozen.

 

What about the Banking Ombudsman?

In my experience the Banking Ombudsman does not intervene where the bank has a suspicion of money laundering and is acting in accordance with its Terms and Conditions.

 

How often are bank accounts frozen?

Figures published by the NCA indicate that they receive approximately 8,000 consent requests each year from banks, building societies and similar institutions.

The NCA on average respond to these consent requests in five working days – and give consent in about 90% of cases.  In about a further 5% of cases they give consent during the moratorium period.

However even where consent is granted the bank’s customer may become the subject of an investigation by the authorities (such as the police, HM Revenue and Customs or the Single Fraud Investigation Service).

 

What is the legal basis for this?

Most of the relevant law is to be found in Part 7, Proceeds of Crime Act 2002 – particularly in s335 and s340.

A case concerning the freezing of a bank account when a suspicious activity report had been filed with the NCA by the bank was considered by the Court of Appeal in London in the case of The National Crime Agency v N & Royal Bank of Scotland plc [2017] EWCA Civ 253 (07 April 2017).  The court concluded that it would only very rarely be appropriate for the court to interfere with the temporary freezing of a bank account where a report had been made to the NCA.

 

How long will the account be frozen?

In the majority of cases the account should be unfrozen within about two weeks.  In a minority of cases the account will be frozen for up to about six weeks, perhaps slightly longer.

[UPDATE: The Criminal Finances Act 2017 included legislation which allows a court to extend the ‘moratorium period’ by up to a further six months (an additional 186 days) which means that an account can be frozen for up to about 32 weeks without a ‘restraint order’. This is now in force.]

Where a ‘restraint order’ is obtained the account will remain frozen after that.

 

What happens after the account is unfrozen?

After the account is unfrozen the bank’s relationship with the customer may return to normal or the bank may write to the customer asking him to close his account (or accounts) within 60 days and move to another bank.

The bank may not give any reason for requiring the customer to close his account.

 

Can the customer claim damages against the bank?

I am not aware of any cases in which bank customers have successfully claimed damages against their bank in relation to an account which has been frozen because of a reasonable suspicion of money laundering (even where, on investigation, no ‘money laundering’ was discovered).

 

Contacting us

Our contact details are here.

David

(Note: This article applies to matters arising under the provisions of the Proceeds of Crime Act 2002 in England and Wales.  Appropriate professional advice should be sought in each individual case.)

UK Supreme Court rules on money laundering arrangements

Supreme Court logoThe UK Supreme Court recently ruled on the law relating to prosecutions for entering into, or becoming concerned in, an arrangement which facilitates the acquisition, retention, use or control of criminal property for, or on behalf of, another person – contrary to s328 Proceeds of Crime Act 2002.

The case arose as a result of the actions of a fraudster, referred to as ‘B’.

Shortly before commencing his fraud the defendant, referred to as ‘H’, opened two bank accounts and handed control of them to ‘B’ who then used them in connection with his frauds.  ‘B’ conned unsuspecting members of the public into making payments into these bank accounts (for services which in truth were non-existent).

The prosecution case was that ‘H’ must have known or at least suspected that ‘B’ had some criminal purpose even if he was not aware of the details of the con.  ‘B’ was convicted of fraud.  ‘H’ was charged with becoming concerned in an arrangement contrary to s328 PoCA 2002.

The Supreme Court was required to consider whether, in the circumstances alleged, ‘H’ could be guilty of a s328 offence – R v GH [2015] UKSC 24 (22 April 2015).

The Supreme Court broke the issue down into four key questions.  In addressing those questions it overturned some decisions of the courts below.

 

1  Must the property be ‘criminal property’ before the arrangement operates on it?

Counsel for the prosecution submitted to the Supreme Court that the same conduct could both cause property to become criminal and simultaneously constitute the offence charged under s328.  He made the same submission in relation to sections 327 and 329, correctly recognising that the three sections have to be construed coherently.

So, he submitted, a thief who steals “legitimate” property is necessarily at the same time guilty of “acquiring criminal property” contrary to s329.

The Supreme Court rejected that view, holding that it failed to recognise the necessary distinction between a person who acquires criminal property and one who acquires legitimate property by a criminal act or for a criminal purpose.

Sections 327, 328 and 329 are aptly described as “parasitic” offences because they are predicated on the commission of another offence which has yielded proceeds which then become the subject of a money laundering offence.

The Supreme Court therefore approved the decision of the Court of Appeal in an earlier case R v Geary [2010] EWCA Crim 1925 that to say that s328 extends to property which was originally legitimate but became criminal only as a result of carrying out the arrangement is to stretch the language of the section beyond its proper limits.  I have discussed the Geary case more fully in an earlier article on this blog.

However, for example, a thief who steals legitimate property might then commit a s329 money laundering offence by his possession or use of that property after his acquisition of it.

In practice such a thief should normally face a charge of theft rather than one of money laundering.  But the legal point that he may also be guilty of a money laundering offence is an important one because of the obligation on banks & others in the ‘regulated sector’ to report suspicions of money laundering under s330.

 

2  Must the ‘criminal property’ exist before the defendant joins the arrangement?

The Supreme Court agreed with the decision of the Court of Appeal in holding that it does not matter whether criminal property existed when the arrangement was first hatched.  What matters is that the property should be criminal property at a time when the arrangement operates on it.

It should be noted that the Supreme Court did not hold it to be necessary that the property should be criminal property at the time when the arrangement commences to operate on it.

The offence is complete when the arrangement becomes one which facilitates the acquisition, retention, use or control of criminal property for, or on behalf of, another person and the defendant knows or suspects this to be the case.

 

3  Were the monies ‘criminal property’ before being paid into the defendant’s bank account?

Counsel for the prosecution made a somewhat technical submission to the Supreme Court that the monies banked were criminal property at the time of payment because they represented a chose in action, namely the obligation of the purchasers of the supposed services to pay for them.

The Supreme Court were unimpressed by this submission, holding that there was a stark absence of material before the court to substantiate a case of this nature.

However the court did not close the door on such an argument being successfully presented in a future case.

 

4  Was the actus reus of the offence committed on the facts of the case?

Looking at the substance of the matter, the money paid by the victims into the accounts was lawful money at the moment at which it was paid into those accounts.  It was therefore not a case of the account holder acquiring criminal property from the victims.

But by the arrangement the respondent also facilitated the retention, use and control of the money by or on behalf of ‘B’.  Did the arrangement regarding the facilitation of the retention, use and control of the money fall foul of s328 on the basis that it was criminal property at that stage, since it was the proceeds of a fraud perpetrated on the victims?

In this case the character of the money did change on being paid into the defendant’s accounts.  It was lawful property in the hands of the victims at the moment when they paid it into the defendant’s accounts.  But it then became criminal property in the hands of ‘B’, not by reason of the arrangement made between ‘B’ and the defendant, but by reason of the fact that it was obtained through fraud perpetrated by ‘B’ on the victims.

There was a crucial difference therefore between this case and the situation in Geary (in which the arrangement itself had been the reason that the property in question became criminal property).

The Supreme Court (overturning the decision of the Court of Appeal) held that there was no artificiality in recognising that change in character of the money, and that it would be appropriate to regard the defendant as entering into or becoming concerned in an arrangement to retain criminal property for the benefit of another.

It was the retention, use & control of the monies after they had been paid into the bank accounts as the result of a fraud, under the bank account arrangement made earlier between ‘B’ & ‘H’, which could properly form the basis of a conviction of ‘H’ under s328.

 

Contacting us

Our contact details are here.

David

(Note: This article applies to prosecutions under the provisions of Part 7 of the Proceeds of Crime Act 2002 in England and Wales.  There are a number of additional issues which could be relevant to a defendant’s trial 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.)

Post Office ‘Horizon’ issue in the news again

Post OfficeThe Post Office has again been mired in controversy over the alleged failings in its ‘Horizon’ software system used in thousands of sub-postoffices around the country.

It is clear that there has been a breakdown of trust between the national Post Office organisation and Second Sight, the independent forensic accountants appointed by the Post Office to investigate the allegations.

 

This has resulted in the Post Office terminating their contract with Second Sight and closing a Working Group which had been set up to examine outstanding disputes between the Post Office & sub-postmasters.

Following an investigation by the parliamentary Business, Innovations & Skills select committee the chairman wrote to the Secretary of State on 17 March 2015 commenting on the “lamentable lack of information” provided to Second Sight by the Post Office.

It is understood that Second Sight completed a report recently but this report remains confidential to the parties involved in the dispute.  Nevertheless media reports have surfaced indicating serious disagreements between the Post Office and the forensic accountants with the forensic accountants claiming that the Post Office have failed to disclose relevant documents to the investigating accountants & the Post Office disputing the accountants’ assertions.

 

Prosecutions

The heart of the dispute has been a number of prosecutions of sub-postmasters following investigations into their figures.  Many of those prosecutions have resulted in conviction of the sub-postmaster for dishonesty.  But matters may not be as straightforward as they appear.

The Justice for Sub-postmasters Alliance (JFSA) believes that in many cases the root cause of the problems have been failures in the Post Office ‘Horizon’ software – which have created unexplained apparent shortfalls in cash in local post offices.  Since sub-postmasters are contractually obliged to make good such shortfalls out of their own pockets they have in some cases ‘cooked the books’ in an attempt to hide these apparent shortfalls from the Post Office organisation.

It is these false entries which have been identified by Post Office internal auditors & which have led to the successful prosecutions.

But JFSA says that this is an injustice where the original computer failings have remained uninvestigated.

The Post Office say that there “has been an exhaustive and informative process which has confirmed that there are no system-wide problems with our computer system and associated processes” and that they “will now look to resolve the final outstanding cases as quickly as possible”.

But we may not have heard the last of this controversy.

David

Getting technical help on proceeds of crime issues

 

My name is David Winch, Director of Accounting Evidence Ltd.

We are forensic accountants specialising in crime and proceeds of crime proceedings in Crown Court cases in England and Wales.

Most of the work we do is financed by legal aid under ‘prior authority’ arrangements.

Personally, I have been qualified as a Chartered Accountant for 35 years and have a lot of experience in the Crown Court as an expert witness.

If you visit our website you will find over 70 detailed technical articles which will help you.

If you can’t find what you want, try the Quick Query button on our website homepage.

That emails me and I will personally reply – free of charge.

If you need expert advice, get in touch.

Accounting Evidence.

It’s what we do.

 

Contacting us

Our contact details are here.

David

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A confiscation case study – the career fraudster

Books - copyright David Winch 2014On 16 June 2014 the Court of Appeal in London heard the appeal of Mr Sam Ernest against a confiscation order in the sum of £308,380 made against him at Kingston-upon-Thames Crown Court.  The Appeal Court judgment R v Ernest [2014] EWCA Crim 1312 makes interesting reading.

Mr Ernest purported to run a business as an events organiser.  He would claim to have contacts from whom he could obtain sought-after tickets to popular high profile events, such as Wimbledon, the London Olympics, rock concerts or film festivals, in return for money.

Mr Ernest sometimes provided the tickets for which he had been paid, but often he would not.  When tickets were not provided he would usually promise refunds – on some occasions refunds were given, but on others they were not.

 

The victims

His victims were in the main either wealthy people or organisations who could afford to pay substantial sums of money for prestige events, or men whom he had befriended or women with whom he entered into relationships.

One woman with whom he was having a relationship got a party of 18 people together, some from the USA, to attend events at the London Olympics.  She paid almost £4,000 to Mr Ernest.  He continued to promise that the tickets would arrive right up until after her friends had arrived in the UK.

In total Mr Ernest defrauded his victims of over £48,000.

 

The police investigation

Mr Ernest’s activities had first been reported to the police in 2009, but they took no action at that stage.  It was not until 2012, when a special team of police officers were investigating fraud associated with tickets for the London Olympics, that attention was focused on his activities.

On discovering that the police wished to speak to him, Mr Ernest prevaricated and would not agree to attend for interview.  No doubt this was in part because he was a United States citizen who had entered the UK on a six month tourist visa in 2005 and was an illegal over-stayer. His passport had expired in 2010.

However in December 2012 Mr Ernest pleaded guilty to 17 counts of fraud and was sentenced to 4 years imprisonment.  Confiscation proceedings followed.

 

The confiscation proceedings

Mr Ernest was subject to confiscation proceedings on the basis that he had a ‘criminal lifestyle‘ having been convicted in the same proceedings of more than 3 offences from which he had obtained a benefit and had, in aggregate, obtained a benefit of at least £5,000, s75 Proceeds of Crime Act 2002.

The Appeal Court judgment does not, of course, give a full history of the confiscation proceedings.  We do not know what was in the prosecution’s s16 statement or in Mr Ernest’s response.  We do know, however, that the confiscation went to a full hearing in the Crown Court which heard evidence from a Detective Constable Knowles and from Mr Ernest.

 

The prosecution assertions

DC Knowles referred to bank accounts held by a Ms Barbara Howell which had apparently been used by Mr Ernest (and by Ms Howell for legitimate purposes).  There was also a bank account in the name of J Bailey Morgan which apparently Mr Ernest controlled.  DC Knowles considered the movements on these bank accounts since the ‘relevant day’, which it was agreed was 29 August 2006 (six years prior to the date on which Mr Ernest had been charged).

DC Knowles calculated the amount of money in these accounts paid in by known victims together with all of the unexplained credits to the accounts, that is all the monies deposited during the relevant period other than those which represented Ms Howell’s legitimate earnings and funds. This figure came to £209,980. This figure included sums specifically identified as being monies paid into that account by persons identified as victims of Mr Ernest’s activities.

The prosecution invited the court to assume all these sums credited to the various bank accounts to be benefit of Mr Ernest’s general criminal conduct pursuant to s10(2).  Presumably to avoid risk of double counting the prosecution did not seek to assert, as benefit of particular criminal conduct, any additional benefit of the 17 offences of which Mr Ernest had been convicted.

However the prosecution did assert that a further assumed benefit arose, under s10(4), in respect of Mr Ernest’s day to day living expenses over the period since the ‘relevant day’.  These were estimated at £16,400 per year for 6 years, so £98,400 in total.  The prosecution accepted that to some extent Mr Ernest had been financially supported over this period by a succession of girlfriends but contended that, even so, he would have incurred this £98,400 expenditure himself.

In consequence, the prosecution’s total benefit figure was £308,380.  The prosecution apparently did not accept that Mr Ernest’s ‘available amount’ would be less than his benefit.

 

The defence evidence

Mr Ernest asserted that on at least some occasions he had supplied tickets for which he had been paid and on other occasions he had made refunds to customers.  So it would not be correct, in his view, to treat the entirety of the sums banked as benefit.  He also asserted that he had no assets available and no hidden assets.

However the defence produced no books and records of the business and no report of a forensic accountant, nor did the defence produce documentary evidence of Mr Ernest’s current ‘available amount’.  The defence relied upon the oral evidence of Mr Ernest.

 

The judgment in the Crown Court

The Crown Court judge entirely rejected the oral evidence of Mr Ernest.  He was, the judge concluded, a “career fraudster” who had used the bank accounts of others and had produced no documents in support of his oral evidence.  The judge concluded that he was a dishonest man who had lied repeatedly under oath.

The judge accepted the benefit figure of £308,380 asserted by the prosecution and found that the defendant had not discharged the burden upon him to show that his ‘available amount’ was less than his benefit.

Accordingly he ordered Mr Ernest to pay £308,380 within 6 months, with a default sentence of 3 years consecutive to the prison term he was already serving.

 

The Court of Appeal judgment

On appeal it was argued that the judge should have reduced the benefit figure to reflect legitimate business activities conducted by Mr Ernest where he had provided tickets or had made refunds.  Furthermore Mr Ernest had incurred expenditures in obtaining the tickets which he had supplied.

The Court of Appeal would have none of this.  It noted the absence of evidence in support of the asserted legitimate activities and commented that “the fact that some unidentified proportion of that money might conceivably be referable to some specific (but unidentified) business transaction does not render the making of the assumption incorrect”.

The Court was not prepared to make any reduction in the benefit figure in respect of expenses which Mr Ernest might have incurred.  It regarded the occasional provision of tickets by Mr Ernest as a means of furthering his fraudulent purpose by luring customers to do more business with him.

The £209,980 assumed benefit arising from credits to the bank accounts was therefore upheld.

But the Court of Appeal did accept that the bank statements showed expenditures by Mr Ernest on his living costs.  These expenditures had therefore been met from monies already included in assumed benefit.  This undermined the prosecution’s assertion that Mr Ernest would have incurred £98,400 of living expenditure funded entirely by additional assumed criminal conduct.  There was no other suitable figure before the court, so this head of benefit was omitted on appeal.

In consequence the benefit figure was reduced to £209,980.  The court ordered Mr Ernest to pay this lower figure and reduced the default sentence to 2 years 6 months.

 

Commentary

One doesn’t know whether in this case the defence had instructed a forensic accountant or not.  It is possible that a forensic accountant’s report had been obtained but had not been disclosed as part of the defence evidence (perhaps for good reason!).

However it should come as no surprise to find a Crown Court judge entirely rejecting the unsupported oral evidence of a convicted defendant.  Possibly if a forensic accountant had given evidence in the Crown Court confiscation hearing the judge might have accepted that the defendant, having incurred the expenses shown on the bank accounts, would not have had an ‘available amount’ equal to the total of his assumed benefit.  Such a conclusion would have been consistent with the Court of Appeal decision in McIntosh & Marsden v R [2011] EWCA Crim 1501.

In the event this defendant seems destined to serve his default sentence in due course.

David

(Note: This article applies to confiscation proceedings under the provisions of Part 2 of the Proceeds of Crime Act 2002 in England and Wales. There are a number of additional issues which could be relevant to a defendant’s confiscation proceedings 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.)

Supreme Court caps confiscation enforcement

Supreme Court logoThe UK Supreme Court has capped confiscation enforcement in cases where more than one confiscation order covers the same joint benefit.  The result is that the State will be unable to recover in excess of 100% of the benefit jointly obtained.  It is as if the confiscation order created a joint and several liability of the defendant to ‘repay’ the benefit jointly obtained.

The principle is simple – but the practical implications may on occasion be complex.

In fact the Supreme Court judgment on 18 June 2014 in the cases of R v Ahmad & Ahmed and R v Fields & Others [2014] UKSC 36 dealt with another point too – confirming that under the law of confiscation if two or more persons obtain a benefit jointly they each obtain the whole of it.  That point is considered in a separate blog article.

 

The problem

The problem may best be understood by a simple example.  Suppose John and Jim get a couple of guns, walk into a bank together and rob it of £10,000.  Subsequently they are caught and convicted and are made subject to confiscation orders.  In those confiscation orders each of John and Jim will have a benefit of £10,000.  Assuming each of them has sufficient assets it seems that in total they will be required to ‘repay’ £20,000 into court.  So, it appears, the court will recover twice the amount stolen.

The Supreme Court concluded that that could not be right.  Recovering double the amount stolen would be disproportionate.  It would not serve the real aims of the Proceeds of Crime Act 2002 and it would be a violation of the defendants’ rights under Article 1 of the First Protocol to the European Convention on Human Rights.

 

The simple answer

The simple answer is to require each of the confiscation orders against John and Jim to provide that it is not to be enforced to the extent that a sum has been recovered by way of satisfaction of another confiscation order made in relation to the same joint benefit.

This is what the Supreme Court held in its judgment at para [74].

So if the court recovers £5,000 from John it will only recover a further £5,000 from Jim.  Of course that means if the court recovers £10,000 from John then it will recover nothing from Jim, but the Supreme Court said that criminals have to accept that risk of unfairness.

 

Potential complications

Although the principle is clear and the reason for it is straightforward, its application in practice may be more complicated.

Suppose that as well as John and Jim robbing the bank there was a getaway driver, Jack.  Let’s suppose Jack was not caught at the time, but a good while later he is caught and convicted.  If he is subject to confiscation then presumably he cannot be liable to pay anything if the court has already received £10,000 from John and Jim.  So that is a bit of luck for Jack!

Let’s consider some other defendants.  Peter and Phil are fraudsters operating a fake business in which they order goods on credit, sell them and disappear – pocketing the money and never paying their suppliers.  Peter and Phil had a joint bank account for the fake business which received £50,000 from customers over a period of just under one year.

Peter and Phil are caught, convicted of fraudulent trading contrary to s9 Fraud Act 2006 and subject to confiscation.  In the confiscation proceedings each of them has a ‘criminal lifestyle‘ having been convicted of an offence carried on for at least 6 months from which a benefit of at least £5,000 has been obtained, s75 PoCA 2002.

Peter and Phil each have a benefit of £50,000 from the offence of which they have been convicted.  But that is not the end of the story.

The separate personal bank accounts which Peter and Phil have are examined and the statutory criminal lifestyle assumptions are applied.  There are £70,000 unexplained credits in Peter’s bank account and £25,000 unexplained credits in Phil’s bank account.  In consequence the court finds Peter’s total benefit for confiscation purposes to be £120,000 and Phil’s total benefit to be £75,000.

Peter’s available amount is £80,000 and Phil’s is £45,000.  So the court makes confiscation orders against Peter for £80,000 and against Phil for £45,000.

If Peter pays the £80,000 and Phil pays nothing, can enforcement proceedings still be taken against Phil?  If they can, how much can be enforced against Phil?  I do not think the Supreme Court judgment helps me answer these questions because I need to know how much of the £80,000 recovered from Peter relates to the £50,000 benefit jointly obtained and how much of it relates to the other £70,000 assumed benefit of Peter’s.

For example if the £80,000 recovered from Peter includes all the £50,000 jointly obtained benefit of the fraud then the most that can be enforced against Phil is his additional assumed benefit of £25,000.

But, at the other extreme, if the £80,000 recovered from Peter comprises £70,000 re his additional assumed benefit and only £10,000 re the jointly obtained benefit then it would appear that the whole £45,000 can be enforced against Phil (because he still has unrecovered amounts of £40,000 joint benefit and £25,000 additional assumed benefit).

Looking at this another way, if we make a presumption that in each case the first £50,000 of the amounts ordered to be paid by Peter and Phil related specifically to the jointly obtained benefit then the £80,000 paid by Peter has repaid all of the jointly obtained benefit and so (arguably) there can be no enforcement action against Phil.  But that would seem to be a nonsensical outcome.

 

Default sentences

We also need to consider the implications for default sentences.

Going back to John and Jim.  They each had a benefit of £10,000 from the bank robbery.  Let’s assume the confiscation orders against each of them specified a default sentence of 6 months.  If the court recovers £5,000 from John – so it can then only enforce a maximum of £5,000 against Jim – does that result in a corresponding reduction in Jim’s default sentence if he fails to pay?

My guess is that Jim will indeed have his default sentence effectively reduced.  But the Supreme Court judgment does not provide the answer.

Presumably Jack, the getaway driver, cannot be made to serve any default sentence if the court has already recovered the £10,000 from John and Jim.  And what about Phil the fraudster – what is the position regarding his default sentence?

 

In conclusion

It seems to me that in solving one problem the Supreme Court have risked creating further problems in relation to the enforcement of confiscation orders.

If it were decided that any ambiguity should be resolved in favour of the defendants then (i) all recoveries from any defendant should be applied against his benefit jointly obtained in priority to his other benefit, and (ii) each defendant’s default sentence ought to be reduced pro-rata when the amount enforceable against him reduces (whether this arises as a result of a recovery from him or as a result of a recovery from another person relating to benefit obtained jointly with him).

David

(Note: This article applies to confiscation proceedings under the provisions of Part 2 of the Proceeds of Crime Act 2002 in England and Wales. There are a number of additional issues which could be relevant to a defendant’s confiscation proceedings 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.)

Dealing with rogue tax accountants

Do HM Revenue & Customs have the powers, the resources and the determination to deal with rogue tax accountants?

I am not here referring to those who promote the complex and sophisticated tax avoidance schemes which make newspaper headlines.  I am referring to small firms of tax accountants, or one man bands, who act for small or micro businesses for modest fees but who are – in a small minority of cases – utterly incompetent, irresponsible or even dishonest.

 

Poor work

The sorts of poor work performed by this small minority include over-claiming of expenses, under-declaration of gross income, erroneous taxable profit computations and claims for tax reliefs, and a lack of integrity which allows the tax accountant to ‘change history’ by backdating events such as the declaration of a dividend of the commencement of a business partnership.

Undoubtedly these sorts of accidental or deliberate ‘errors’ by a small minority of incompetent, irresponsible or dishonest tax accountants cost HMRC millions in lost taxes every year.

 

Tax accountants or tax agents?

I refer to these people as tax accountants.  HMRC would refer to them as tax agents, because they act as the agent for their client in dealing with HMRC.  However their clients would refer to them as their accountant, not their agent, and so I am referring to them as tax accountants rather than tax agents.

 

Why would a rogue accountant succeed?

Proprietors of small and micro businesses generally have neither the skills nor the desire to get involved in the nitty gritty of accounts preparation or the completion of their annual tax returns.  They are unlikely to be in a position to evaluate the competence of their tax accountant except to the extent of regarding a lower tax bill as a sign of a better service.

A rogue accountant may be able to produce a lower tax bill for a smaller fee, and ask fewer irritating questions of his client, than a more competent tax accountant would in performing his work thoroughly and with integrity.

 

So what’s the problem?

A rogue accountant will cause problems for HMRC in terms of tax revenues which are ‘lost’ and problems for competing honest and competent tax accountants who will be unable to offer an apparently comparable service.

But ultimately a rogue tax accountant will create a problem for his client if and when HMRC investigate his tax affairs and seek from him payment of under-declared taxes, interest and penalties.

 

Current trends

There are a number of current trends which, in the author’s view, will lead to a worsening of the problem.  Whilst a reduction of ‘red tape’ for small businesses is welcome in many respects, the simplification of accounting and tax return requirements gives more scope for rogue tax accountants to continue in practice undetected.  At the same time it has become increasingly prevalent for individuals to earn their living by self-employment, requiring the completion of a self assessment tax return, rather than as employees of larger organisations.

This has coincided with a reduction in HMRC staff numbers and a new emphasis on relying on tax accountants to file information directly into HMRC computer systems so that fewer sets of figures are routinely reviewed, even briefly, by HMRC staff.  Indeed HMRC are working on proposals to give tax accountants greater scope to deal with their clients’ tax affairs without the intervention of HMRC staff.

 

The role of professional accountancy bodies

But isn’t it the role of the professional accountancy bodies to ‘police’ their members to ensure that they are honest, competent and act with integrity?

Although it is not well known, anybody can set up in business as an accountant and act as a tax agent.  It is estimated that approximately one in four tax agents registered with HMRC holds no recognised accountancy or tax qualification.

So whilst the professional accountancy bodies do exercise a role in ‘policing’ their members, there is nothing they can do to ‘police’ non-members.

 

What are HMRC and the government doing?

HMRC can and do prosecute rogue tax accountants.  But such prosecutions are few in number because a criminal prosecution is very resource intensive, expensive and slow to come to fruition.  HMRC have a high success rate in securing convictions when they do prosecute – but that may simply be an indication that they prosecute only in the worst and most obvious cases.

Penalties can be very severe upon conviction.  Cheating HMRC is one of the relatively few criminal offences in English law for which there is no maximum sentence.

Aside from criminal prosecution, HMRC have power to levy civil penalties on tax accountants under Schedule 38 Finance Act 2012.

But all of these powers relate only to dishonest tax accountants – not to those who are merely incompetent or irresponsible.

 

Tax Agent Initiative Team

Perhaps in an attempt to fill that gap, HMRC have established a Tax Agent Initiative Team (TAIT) which has identified tax accountants whose clients appear to include a relatively high number of tax repayment cases – with a particular emphasis on subcontractors in the construction industry (CIS repayment cases).  TAIT is conducting a programme of contacting these accountants, initially by letter, with a view to ensuring an acceptable standard of work by them in relation to the examination of their clients’ business records and the accuracy of tax returns submitted by them on behalf of their clients.

In particular TAIT is requesting tax accountants whom it has identified to voluntarily agree, by way of a signed Memorandum of Understanding, to confirm that the tax accountant:

  • will examine underlying client records, at least on a sample basis,
  • will ensure that each client views and approves his completed tax return before it is submitted to HMRC, and
  • does not complete any subcontractor’s tax return in which expenses claimed exceed 20% of gross income unless the tax accountant has seen all the records to support that level of expenditure.

Alongside the Memorandum of Understanding programme, HMRC are conducting visits to some tax accountants to discuss HMRC’s expectations of the professionalism to be exhibited by them.

HMRC point out that in the event of a lack of cooperation from the tax accountant they may put a temporary stop on tax repayments in respect of tax returns submitted, pending completion of HMRC’s own assurance tests on returns submitted by that tax accountant.

The focus of this exercise is on tax repayment cases – not on cases in which tax is payable by the client but in a lower amount than the true liability.

 

What is not being done?

HMRC have no requirement that a person acting as a tax accountant must be ‘fit and proper’.  There is no express legal provision a stop an individual acting as a tax accountant if he has, for example, a previous conviction for tax fraud.  (Extremely rarely HMRC will decide to withdraw the tax agent status of an accountant but this has apparently been done only twice in the history of HMRC and on the basis that HMRC has a general discretion in discharge of their functions under s9 Commissioners for Revenue & Customs Act 2005.)

Nor is there any requirement that a person has any particular knowledge or skills before acting as a tax accountant.  Anybody can set up as a tax accountant.

There is no legal requirement for a tax accountant to have a separate bank account, known as a ‘client account’, to safeguard monies which he receives but which belong to his clients – such as income tax repayments which he has received on their behalf.

Even more surprisingly, HMRC have no powers to levy civil penalties on a tax accountant who is incompetent or irresponsible (without being dishonest) and consequently files tax returns which understate his clients’ tax liabilities.  HMRC, and English law, take the view that where incorrect tax returns are filed penalties are chargeable on the client – not the tax accountant.  It is then for the client, if he can, to recover the penalty from the tax accountant by suing him for negligence – but there is no legal requirement for a tax accountant to carry insurance to cover any such claims.

Although the provisions of Schedule 24 Finance Act 2007 could be read as creating a liability to penalties for a tax accountant who incompetently or irresponsibly files an incorrect return for his client, HMRC have indicated that they have no intention of levying penalties on tax accountants under this legislation.

So it seems that the burden is on clients, and potential clients, of tax accountants to ensure that the person they instruct is sufficiently competent, thorough and honest to do the work properly.  Or, of course, a taxpayer can simply do the job himself, calculating his own taxable income – and the best of luck with that!

David

(Note: This article refers to tax law in England and Wales. There are a number of additional issues which could be relevant to tax liabilities and penalties in particular cases which it is not possible to deal with in an article such as this. Appropriate professional advice should be sought in each individual case.)

Accountant sentenced to 7 years for cheat & fraud

Legal wig copyright David Winch 2014An accountant has been sentenced to 7 years’ imprisonment for cheating HMRC and defrauding his clients.

Simon Terry Pearce, 48, who held no recognised accountancy qualifications, ran S T Pearce Accountants from offices in St Austell, Cornwall.  He was convicted on 26 charges after a ten week trial at Truro Crown Court.  The prosecution evidence assembled by HM Revenue & Customs ran to approaching 40,000 pages and, in total, 51 prosecution witnesses were called to give evidence.

 

The allegations

It was alleged that over a period of several years Mr Pearce had operated his practice dishonestly by preparing tax returns for his clients which overstated their business expenses and the tax which they had suffered under the Construction Industry Scheme (CIS tax), overclaimed capital allowances particularly in relation to cars and – in relation to Capital Gains Tax – understated the sales proceeds of properties.  In many cases Mr Pearce had revised previous years’ tax returns for new clients.  The result of all this was that his clients’ tax liabilities were dishonestly understated and tax refunds were generated falsely.

It was further alleged that Mr Pearce had forged clients’ signatures and dishonestly abused HMRC’s Structured Action Request online system for taxpayers and their authorised agents with the result that clients’ tax refunds were paid by HMRC into his bank account rather than to the clients.  Whilst in some cases these refunds were forwarded to clients fully and reasonably promptly, in many cases refund payments were delayed (sometimes by a period of years), or paid on only in part, or not paid on at all.

Finally it was alleged that in relation to Mr Pearce’s own tax returns he had dishonestly understated his fee income and that he had failed to register his business for VAT at the appropriate time.

 

Mr Pearce’s defence

Mr Pearce said that he had not been dishonest. The tax returns which he had prepared for clients reflected the information which clients had provided to himself and his staff at interviews with them.  He had included fair estimates of expenditures for which the clients had no documentary evidence, particularly in relation to travelling and subsistence.  He had misunderstood tax law in relation to motor cars, believing that 100% first year allowances or annual investment allowances were available, and the abolition of CGT taper relief in 2008 had not come to his attention.

He had arranged for clients’ tax refunds to be paid to his bank account when fees were due to him.  His failure to pass the balance of refunds on to clients was as a result of inadequate and misleading information received from HMRC, poor record keeping in his office and pressure of work resulting from having taken on too many clients.  He had fobbed off clients who had enquired about their refunds and had given them excuses and explanations for delays which were untrue.  He accepted that he had used HMRC’s online Structured Action Request facility to arrange refunds to be paid to him but believed he was entitled to do so.

He asserted that clients’ income tax returns were only submitted to HMRC after clients knew what was on them, albeit that the clients may have received and signed paper copies of the returns only after they had been filed online with HMRC.

 

My role

I was instructed by Mr Pearce’s solicitors and counsel to advise them on generally accepted conduct by accountants in relation to the preparation of accounts and tax returns for clients, relevant tax law and practice, the proper treatment of clients’ tax refunds, and to examine Mr Pearce’s own business records and those of certain of his clients, together with the associated accounts and tax computations, to advise whether tax liabilities had been understated.

I attended court and advised the defence team throughout the presentation of the prosecution case but I was not myself called to give evidence.  The only witness called by the defence was Mr Pearce himself.

 

The clients’ evidence

The clients typically gave evidence to the effect that they relied upon and trusted Mr Pearce as their accountant to deal properly with their accounts and tax affairs.  In many cases they denied providing Mr Pearce with information which he claimed to have received from them.

They did not themselves understand accounts or tax and believed that their tax returns were being correctly prepared and that they were entitled to any refunds which they had received.  They were devastated when they learned that they were required to repay substantial sums to HMRC.

 

The outcome

The jury found Mr Pearce guilty on 26 of the 30 counts which he faced.  Clearly the jury considered him to have been thoroughly dishonest over a period of years.

 

The lessons to be learned

Mr Pearce frequently received tax refunds on behalf of clients but did not operate a client bank account.  In practice refunds received were swallowed up by business and private expenses leaving Mr Pearce unable to pass on to clients the monies which were due to them.

The firm’s working papers and interview notes in support of figures in the accounts and tax returns were inadequate to demonstrate persuasively which figures were based on information that had been provided by clients and which were based on estimates made by Mr Pearce apparently based on his general knowledge of his clients’ activities – or to refute the allegations that some increases in claimed expenses arose purely from fabrications by Mr Pearce.

In many cases business expenses in accounts and returns had apparently been compiled based only on an examination of paid bills and discussions with clients – and without examination of clients’ bank statements.  In the majority of cases which I examined Balance Sheets had not been prepared.  Had the accountancy work been more thorough then many mis-statements which were made on tax returns, for example from duplication of genuine expenditures, could have been avoided.

Either Mr Pearce’s knowledge of tax law and practice was faulty and out of date in important respects or he was claiming allowances and reliefs for his clients which he knew were not available to them.

 

Overview

This was a very significant prosecution by HMRC, the biggest case ever prosecuted by them in Cornwall, and a major case by any standards.  Few Crown Court trials run to ten weeks or involve over 50 witnesses and few criminal investigations generate approaching 40,000 pages of exhibits.  The prosecution asserted that Mr Pearce had ultimately retained £170,000 in refunds due to his clients and that overall HMRC had lost between £1 million and £2 million as a result of his activities.

I have no doubt that my advice was valuable to the defence in professionally examining the prosecution evidence and ensuring that it was appropriately challenged.  Ultimately the weight of evidence against Mr Pearce was overwhelming and the jury were sure that he had been dishonest.

David

(Note: This article refers to a criminal prosecution in England and Wales. There are a number of additional issues which could be relevant to criminal proceedings in particular cases which it is not possible to deal with in an article such as this. Appropriate professional advice should be sought in each individual case.)

Confiscation and multiple defendants

Police lamp copyright David Winch 2014The Court of Appeal in London recently considered a couple of questions which arise where more than one defendant is convicted and then subject to confiscation.  Where benefit is obtained jointly by co-defendants should each of them be regarded as obtaining the whole of the benefit which they obtained jointly?  Secondly, is it proper for confiscation orders to be made against the various co-defendants which require them to pay in total more than the amount obtained from the offence?

 

These questions arose in the case of Fields and Others v R [2013] EWCA Crim 2042.  Essentially the position was that the co-defendants, Mr Fields, Mr Sanghani and Mr Sagoo had been engaged in a fraud between January and June 2005 which generated £1,410,762.  Each of them was convicted of having been at the heart of the fraud and so each of them had jointly obtained the benefit of it.

In the Crown Court the judge made confiscation orders against each of them recording a benefit of the entire amount obtained in the fraud (uplifted for inflation between 2005 and the date of the confiscation order under s80(2)(a)).

When it came to considering the ‘available amount‘ of each defendant, the Crown Court judge concluded that none of the defendants had satisfied him that he had an ‘available amount‘ less than his benefit.  Accordingly he made confiscation orders against each of the defendants in the full amount of the benefit generated by the fraud.

Each of the defendants appealed against the confiscation orders.

 

Benefit jointly obtained

In relation to the benefit jointly obtained it was argued on appeal that – whilst each of them had obtained an interest in the entire £1,410,762 obtained from the fraud – the value of each defendant’s interest was only a one-third share (because of the impact of the interests held by the other defendants).  It was contended that, in consequence, s79(3) applied and resulted in the value of each defendant’s benefit being equal to one-third of the value of the total amount obtained by the fraud.

The Court of Appeal rejected that contention.  They considered the argument to be “altogether too artificial”.  They remarked that, “Section 79(3) of the 2002 Act is to be taken as, generally speaking, extending to making allowance for lawfully subsisting prior interests of other persons: not to the asserted ‘beneficial interests’ of co-conspirators whose very criminality has caused the relevant property to be obtained jointly in the first place”.

Furthermore they pointed out that there was precedent case law, binding upon them, particularly from the House of Lords decisions in R v May [2008] UKHL 28 and R v Green [2008] UKHL 30, which was wholly against the defendants’ argument on this point.  The Court of Appeal did not consider that more recent decisions, such as that of the Supreme Court in R v Waya [2012] UKSC 51, had undermined the authority of the House of Lords’ earlier decisions in this connection.

In truth it seems that there was little prospect of the defendants succeeding on this argument in the Court of Appeal and it may be expected that the decision will now be further appealed to the Supreme Court (which would not necessarily be bound by the earlier case law).  It may be noted that the possible implications of s79(3) were not discussed in the House of Lords’ judgments in those earlier cases.

 

Available amount and multiple recovery

The Court of Appeal considered whether it was open to the Crown Court judge to hold that none of the defendants had satisfied him that his ‘available amount‘ was less than his benefit.  The Appeal Court upheld the Crown Court judge’s findings on that point.

The defendants then argued that, as a result of the three confiscation orders, the Crown would (if the orders were satisfied) recover three times the amount obtained from the fraud.  They submitted that this multiple recovery operated like a fine upon the defendants and was disproportionate and a breach of the defendants’ rights under Article 1 of the First Protocol to the European Convention on Human Rights (‘A1P1’).

The argument based on disproportionality relies heavily upon the Supreme Court decision in Waya.  But Waya was not a case involving more than one defendant and the particular issue of multiple recovery was not a relevant consideration in that case.

The Court of Appeal rejected the defendants’ arguments on this point also.  They considered that the House of Lords cases again were authority, binding upon them, which were against the defendants’ submissions – and that the decision in Waya had no impact on this issue.

The confiscation orders made against each defendant by the Crown Court judge had reflected the amount of the benefit obtained by him.  The confiscation legislation, said the Court of Appeal, “requires the focus of attention to be on depriving each defendant of the proceeds of his crime”.  But the defendants’ argument would require each confiscation order to take into account the confiscation orders made against co-defendants – and that was not appropriate.

However this again is a point which the Supreme Court may be asked to consider if the case is further appealed.

Of course if the defendants had been successful in reducing their benefit to one-third of the amount obtained by the fraud then the issue of multiple recovery would have evaporated.

 

Delays in making the confiscation orders

Finally, it is interesting to note that in this case the police action against these defendants commenced in mid-2005.  The defendants were convicted of the fraud in November 2008.  The confiscation orders were made in the Crown Court in February 2010 (against Mr Fields) and November 2012 (against Mr Sanghani and Mr Sagoo).  The Court of Appeal decision was handed down in November 2013 (more than 8 years after the offence was committed) and the matter may yet go to a further hearing before the Supreme Court!

David

UPDATE: On 18 June 2014 the Supreme Court confirmed that the benefit should NOT be apportioned amongst the conspirators (see new blog article “UK Supreme Court rules on benefit obtained jointly“) but that the enforcement of each defendant’s confiscation order should be subject to a proviso that the State shall not recover more than 100% of the benefit jointly obtained, effectively creating a joint and several liability of the conspirators to ‘repay’ the benefit obtained jointly (see new blog article “Supreme Court caps confiscation enforcement“).

(Note: This article applies to confiscation orders under the provisions of Part 2 of the Proceeds of Crime Act 2002 in England and Wales. There are a number of additional issues which could be relevant to a defendant’s confiscation order 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.)