The Proceeds of Crime Act – can it affect you?
Proceeds of crime is the term that is used to describe money or assets gained by criminals during their criminal activity. Local authorities, the Environment Agency and others including the Crown Prosecution Service have the power to confiscate these assets so that crime does not pay. In this update, we discuss what proceeds of crime proceedings are, the court process and a recent Court of Appeal decision about this issue involving rental property and how it may affect you.
What are proceeds of crime proceedings?
Proceeds of Crime Act (“POCA”) proceedings must commence where:
— A defendant is convicted of an offence in proceedings brought before the Crown Court or where a defendant’s case is committed to the Crown Court for sentence; and
— The prosecution asks or the court considers it appropriate to commence POCA proceedings.
The first step in the POCA process is to determine the amount a defendant is liable to pay under a confiscation order. To do this, the Court must identify the benefit figure (the amount the defendant has received through their illegal activities e.g. the non-payment of licence fees) and the available amount (i.e. the money or property held). Accountants and other experts are often used to help calculate these and the recoverable amount. The confiscation order will detail the recoverable amount and when it must be paid by.
A confiscation order can only be made by the Crown Court.
Prosecution against Mr Kamyab
In a recent Court of Appeal case, the London Borough of Barnet (Barnet Council) secured an order for £500,000 after a judge had initially only ordered the defendant, Mr Kamyab, to pay £270.
The background to the case was that Barnet Council had issued a summons against Mr Kamyab in 2014. Mr Kamyab failed to comply with an enforcement notice requiring the defendant to cease using a property as nine units of residential accommodation. This was a case of “unlawful property conversion” specifically alleging that the property had been converted from a five-bedroom single dwelling into separate flats.
Mr Kamyab insisted that the conversion had taken place prior to him purchasing the property, but this was not accepted by the council. Mr Kamyab was convicted of the offence on 2 February 2015. His appeal was dismissed in August 2016 and he was fined £10,000. Barnet Council initially contended that the defendant’s benefit from the offence was £244,406, however, this was subsequently revised up to £455,414.
The Court of Appeal allowed Barnet Council’s appeal and ordered a hearing to determine the merits of the confiscation application. A confiscation order was made for the sum of £499,363 payable within 3 months. If Mr Kamyab fails to pay, he could be imprisoned for three and a half years.
This case is an important reminder of the importance of complying with enforcement notices, planning and HMO licensing requirements with further potential and serious repercussions over and above standard fines.
Our Head of Regulatory, Kathryn Gilbertson, is renowned for her expertise in advising on Proceeds of Crime issues. She can help provide a clear route map of the law on your obligations as well as defending an action by local authorities.
This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. This update relates to the prevailing circumstances at the date of its original publication and may not have been updated to reflect subsequent developments. If you have general queries about our updates, please email: firstname.lastname@example.org