The Serious Crime Act 2015 brings in some sweeping changes to the Proceeds of Crime Act today. The existing legislation governing confiscation and restraint orders is often described as draconian. These changes only seek to reinforce that view as times are about to get even tougher for defendants facing confiscation orders.
All confiscation orders made on or after the 1st June 2015 will be subject to the following provisions:
Length of Time to Pay Reduced
Prior to the 1st June 2015, the prescribed time to pay was up to six months which could, on application, be extended to a maximum of 12 months. This has now been halved and so defendants will, in the first instance, be given up to three months to pay which can, on application, be extended to a maximum of six months.
When time to pay expires interest will begin to accrue (currently at a rate of 8% per annum) and enforcement proceedings will be initiated. This change is intended to achieve quicker satisfaction but in reality it is likely to lead to:
- Increased numbers of applications to extend time to pay;
- Increased numbers of enforcement proceedings which in turn is likely to lead to an increase in defendants being ordered to serve the default sentence (see below);
- Additional interest to be paid.
It will therefore be imperative that defendants realise their assets as quickly as possible, although inevitably there will be occasions where this is not possible for reasons beyond the control of the defendant (e.g. when property needs to be sold). This is also likely to lead to an increase in applications to vary confiscation orders and/or the amount of interest payable.
The Court will now also be able to order earlier payment dates for part of the total sum, e.g. payment of a sum known to be in bank account within 14 days with the balance to be paid within three months where the balance represents the sale of assets such as vehicles and/or property.
Increase in Default Sentences
Prior to the 1st June 2015, the bands for the periods of imprisonment in default of payment were as follows:
|An amount not exceeding £200||7 days|
|An amount exceeding £200 but not exceeding £500||14 days|
|An amount exceeding £500 but not exceeding £1,000||28 days|
|An amount exceeding £1,000 but not exceeding £2,500||45 days|
|An amount exceeding £2,500 but not exceeding £5,000||3 months|
|An amount exceeding £5,000 but not exceeding £10,000||6 months|
|An amount exceeding £10,000 but not exceeding £20,000||12 months|
|An amount exceeding £20,000 but not exceeding £50,000||18 months|
|An amount exceeding £50,000 but not exceeding £100,000||2 years|
|An amount exceeding £100,000 but not exceeding £250,000||3 years|
|An amount exceeding £250,000 but not exceeding £1 million||5 years|
|An amount exceeding £1 million||10 years|
The bands have now reduced in number and the maximum terms increased, as follows:
|An amount not exceeding £10,000||6 months|
|An amount exceeding £10,000 but not exceeding £500,000||5 years|
|An amount exceeding £500,000 but not exceeding £1 million||7 years|
|An amount exceeding £1 million||14 years|
In addition, where the confiscation order exceeds £10 million the provision allowing release at the half way stage of a sentence will not apply. Therefore, defendants that are unable to satisfy confiscation orders in excess of £10million will have to serve the full 14 years subsequent to any term of imprisonment for the substantive offence thereby increase the maximum period in default from five years in real terms to 14 years. This only emphasises the need to get specialist advice in what is an extremely punitive area of law.
Introduction of Third Party Rights
Prior to the 1st June 2015, third parties with an interest in any property in which the defendant also has an interest would have no standing and no right to representation during the confiscation proceedings. Claims by a third party could only be made during the enforcement stage, when applications for the appointment of enforcement receivers were being considered. Third parties could give evidence as a witness for the defendant (and still can) but they had no direct rights to address the court.
Under the new provisions the Court has the right to make a conclusive ruling as to the determination of the extent of the defendant’s interest, and consequently the extent of a third parties interest, as long as any third party has been given reasonable opportunity to make representations. Such a ruling would be binding and would defeat any claims made subsequently in the family or civil courts. In view of this, it is envisaged that this power should only be exercised in straightforward cases and therefore the Court can decline to exercise this power ‘if appropriate to do so’.
The prosecution are under a duty to provide the court with any information known to them that would be relevant to such a determination, which includes advising of information that suggests that a third party does or may have an interest (legal or beneficial).
Third parties should seek early legal advice and representation in order to best protect their interests, particularly as the new provisions allow the court to order third parties to provide information and failure to do so could result in contempt of court proceedings. Legal aid may be available dependent on the financial circumstances of the third party.
The new provisions do provide a power to appeal to the Court of Appeal if a party was denied reasonable opportunity to make representations or where giving effect to the ruling would result in a serious risk of injustice.
The Crown Court can now make a ‘compliance order’. A compliance order is such order as the court “believes is appropriate for the purpose of ensuring that the confiscation order is effective”.
A compliance order might, for example, restrict a defendant’s ability to travel outside the UK or might order information to be provided as to the steps being taken to realise assets. If a compliance order is made the court must consider whether travel outside should be restricted. This is the only example given in the legislation and so it is yet to be seen what type of orders the prosecution and court try to impose.
A compliance order can be made at the same time as the confiscation order or at any later time (whilst the confiscation order remains in effect) upon application by the prosecution.
Increased powers to seize money
The new provisions allow money to be taken direct from a defendant’s bank account (or similar) as soon as a confiscation order has been made. Prior to the 1st June 2015, this power could only be exercised where the money was subject to a restraint order and the time to pay had expired.
Lower Threshold for Pre-Charge Restraint Orders
Prior to the 1st June 2015 a pre-charge restraint order could only be made if there is ‘reasonable cause to believe’ that the alleged offender has benefited from criminal conduct. The test has now been amended so that prosecutors only have to establish ‘reasonable cause to suspect’.
It is worth noting that prosecutors must still show there is a genuine risk of dissipation of assets and, in addition, the new provisions stipulates that the prosecution must provide reports to the court as ordered and that the restraint order will be discharged if criminal proceedings are not initiated within a reasonable time.
Restraint Orders and Legal Aid
As from the 1st June 2015 there is a power to compel restrained assets to be used to satisfy legal aid costs and contributions.
What all the changes show are that the stakes are high for those facing confiscation proceedings. Therefore defendants, and third parties, should ensure they seek early specialist advice.
Cartwright King has a dedicated team specialising in confiscation and restraint and are highly experienced in representing both defendants and third parties.