Tainted Gifts & Transfer of Property Undervalue
We have previously shared articles that delve into various aspects of the Proceeds of Crime Act 2002 (‘POCA’) including 'Tainted Gifts'. This legislation outlines the guidelines and procedures governing the confiscation process, which defendants may undergo upon conviction for specific offences.
POCA seeks to recover any financial gain enjoyed by a convicted defendant, in respect of certain offences, from the proceeds of his crime.
Amongst the many considerations that may confront a Financial Investigator investigating the affairs of a convicted defendant are ‘Tainted Gifts’ and ‘Transfers made Under Value,’ being devises by which a defendant may have sought to disguise his criminal gain.
John Veale examines these aspects of POCA and explores the potential impact on recipients, commonly referred to as "third parties."
Tainted Gifts
Section 77 of POCA provides that:
Where a court has either not made a decision or has determined that the defendant has a criminal lifestyle:
- a gift is tainted if it was made by the defendant at any time after the relevant day.
- a gift is also tainted if it was made by the defendant at any time and was of property which was obtained by the defendant as a result of or in connection with his general criminal conduct, or
- which represented in the defendant’s hands property obtained by him as a result of or in connection with his general criminal conduct.
Where a court has decided that the defendant does not have a criminal lifestyle:
- a gift is tainted if it was made by the defendant at any time after the date on which the offence concerned was committed, or
- if his particular criminal conduct consists of two or more offences and they were committed on different dates, the date of the earliest.
The relevant day is the first day of the period of six years ending with the day when proceedings for the offence concerned were started against the defendant, or, if there are two or more offences and proceedings for them were started on different days, the earliest of those days.
The defendant’s particular criminal conduct includes any conduct which constitutes offences which the court has taken into consideration in deciding his sentence for the offence or offences concerned.
Transfer of Property Undervalue
Section 78 of POCA provides:
- if the defendant transfers property to another person for a consideration significantly less than the value of the property at the time of the transfer, it is to be treated as making a gift.
- references to a recipient of a tainted gift are to a person to whom the defendant has made the gift.
Section 79 of POCA provides the basic rule when identifying value of the property:
- its value is the market value of the property at that time.
- if at that time, another person holds an interest in the property, its value, in relation to the person holding the property, is the market value of his interest at that time, ignoring any charging order.
Potential Consequences for Recipients
Once identified, the recipient of a Tainted Gift or a Transfer under Value, will be requested to return the monies or property received. The amount returned will be credited to the debt owing under the Confiscation Order and which may be sufficient to extinguish the amount due, thereby releasing the defendant from the debt.
Upon the issuance of the Confiscation Order , the defendant will be notified of a date by which his debt under the Order must be discharged, accompanied by a penalty clause which will be exercised in the event of failure to extinguish such debt.
Accordingly, failure by the recipient of the gift or transfer to co-operate in the return of the amount due may, until such time as repayment has been made, either voluntarily or as the result of enforcement proceedings, result in the defendant having the ‘Sentence in Default’ activated, which may result in committal to prison or the extension of a term being served.
A Confiscation Order, and its penalties for default, attach to the defendant against whom it is made and not any particular asset, such as a Tainted Gift or a Transfer Under Value.
Section 51 of POCA provides a Court with power to appoint a Management Receiver who can take possession of assets.
Additionally, a Court may itself, by virtue of section 51(6) (a), of POCA order a person holding an interest in realisable property to make restitution to the Receiver of such payment as the court specifies, although such person must be given a reasonable opportunity to make such representations as appropriate to the court. These may be made when an application is being made by the Prosecution to the Court to appoint a Management Receiver.
How We Can Help?
POCA procedures are extremely complex and detailed and should be overseen by professional experts. There are few complications likely to arise under POCA proceedings that the Team at KANGS has not previously encountered and we regularly achieve on behalf of our clients, substantial reductions in the value of assets claimed to have been transferred under value or forming tainted gifts.
If you are, or anticipate becoming involved in any way whatsoever in Confiscation Proceedings, please do not hesitate to contact a member of our Team.
Telephone: 0333 370 4333
Email: info@kangssolicitors.co.uk
