Does Property Held Always Have To Be Benefit?

Does Property Held Always Have To Be Benefit?

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Many commentators have called the provisions of the Proceeds of Crime Act unfair. Not only are they very hard on the crime lords and drug dealers, but they can severely penalise smaller crooks and even unfortunate business men caught carrying out regulatory breaches inadvertently.

The regulators have been using the powers of the Proceeds of Crime Act 2002 with some abandon. Possibly this is their own method for adding to the sometimes light punishements that are handed out by the courts, or it could be a way for the strapped public sector to raise more cash. Whatever the circumstances, lesser crooks or business men flouting a few rules can find themselves in very hot water with rather a lot to lose in confiscation proceedings. They might then lose everything they actually own as would major criminals.

A very obvious asset for the regulators to target is the family home. This would normally be added on to the alleged benefit derived from the criminal activity. Therefore, a person who can't be bothered with rules and regulations, or has "saved" a bit of tax here and there, may suddenly find themselves facing the loss of everything they have worked for valued at many more times the size of their crimes.

The regulators will allege a level of benefit within their Statutory Statement of Information that they must produce under Section 16 of the Proceeds of Crime Act so that a court can consider how much they have obtained from their life of crime. When an independent forensic accountant is faced with this statement there is often a gasp of horror. The reason for this is that there is no constancy in the treatment by the various Crown investigators who are looking at all the ways to include assets within the benefit. Property is usually a feature, and it can be included in any number of ways.

This could easily be the matrimonial house purchase a long time ago. Here we see that the acquisition of the property should not be included in the benefit calculations. It was acquired a long time before the Relevant Date. A time 6 years before the Relevant Dates will give the period during which regulators can make assumptions that all transactions and assets are criminal proceeds.

In the case that the property has risen in market value during the period since since the Relevant Date, more equity could be available to be treated as benefit. However, this is only in respect of any increase that can be matched to mortgage payments and then only if the source of those mortgage payments can be deemed to represent criminal benefit.

Most of the confiscation proceedings that are currently in the courts represent proceedings commenced a year or two ago. Therefore the Relevant Date is going to be around 2003 - 2006 in most cases. Given that there has been a severe property crash in 2008, not many properties are currently showing equity growth in this period - a lot of properties acquired with mortgages having little or no equity!

These are all very important considerations and after the initial shock of seeing a claim for the full market value of a property included within every confiscation order sought, it is often possible to present an argument for a more realistic sum.

Crooks ought to lose all of their ill gotten gains. However, the assumptions allowed by the Proceeds of Crime Act 2002 often mean that unreasonable benefit estimates are presented and therefore there is a strong case for the employment of the forensic accountant to rationalise the claim. This adds to the cost of managing the criminal confiscation system of course but ensures a fair system continues. But it does turn out for the best in that substantial sums are obtained from the crooks ensuring that a warning is sent out to would be offenders who might think that saving a little income tax, VAT or corporation tax, or flouting a few regulations might be harmless enough.

About the Author:
Mark Jenner specialises in the Proceeds of Crime Act 2002 and fraud cases. He is a Fellow of the Institute of Chartered Accountants, a Member of the Expert Witness Institute, a Certified Fraud Examiner and has a Masters Degree in Fraud Management. His work includes assessing fraud and confiscation proceedings cases.



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