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Tax Evasion and the Proceeds of Crime Act 2002

Tax Evasion and the Proceeds of Crime Act 2002

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Published by punktlich
"Tax evasion and the Proceeds of Crime Act 2002", by Peter Alldridge & Ann Mumford, Legal Studies, v. 25, no. 3, Sept. 2005, p. 353.
"Pursuit of the proceeds of crime has always been central to the criminal justice agenda of Tony Blair's Labour Party.' In response to Blair's moral imperatives and to wider global forces, legislation has been put in place that targets, in various ways, the proceeds of crime. These efforts reached at least a temporary culmination in the Proceeds of Crime Act 2002. The mechanisms directed against property are backed by widespread reporting obligations, set out in the Money Laundering Regulations 2003, implementing the Amending EU Directive. The increased rate of seizures and growing rate of confiscation under the Proceeds of Crime Act 2002 and a number of decided cases under the Act are evidence of the courts 'doing their bit'. A large industry is now in place for the delivery of the legal and other services the need for which was generated by the Proceeds of Crime Act 2002."
"Tax evasion and the Proceeds of Crime Act 2002", by Peter Alldridge & Ann Mumford, Legal Studies, v. 25, no. 3, Sept. 2005, p. 353.
"Pursuit of the proceeds of crime has always been central to the criminal justice agenda of Tony Blair's Labour Party.' In response to Blair's moral imperatives and to wider global forces, legislation has been put in place that targets, in various ways, the proceeds of crime. These efforts reached at least a temporary culmination in the Proceeds of Crime Act 2002. The mechanisms directed against property are backed by widespread reporting obligations, set out in the Money Laundering Regulations 2003, implementing the Amending EU Directive. The increased rate of seizures and growing rate of confiscation under the Proceeds of Crime Act 2002 and a number of decided cases under the Act are evidence of the courts 'doing their bit'. A large industry is now in place for the delivery of the legal and other services the need for which was generated by the Proceeds of Crime Act 2002."

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Vol
25
No
3
September2005
Legal
Studies
Tax
evasion
and
theProceeds
of
Crime
Act
2002
Peter
AIldridge
Drapers'Professor
of
Law,
QueenMary,University
of
London
Ann
Mumford
Lecturer
in
Taxation
Law,
LondonSchool
of
Economics
INTRODUCTION
Pursuit
of
the
proceeds
of
crimehas
alwaysbeencentral
to
the
criminal
justice
agenda
of
Tony
Blair's
Labour
Party.'
In
response
to
Blair's
moral
imperatives
2
and
to
widerglobalforces,
3
legislation
has
beenput
in
placethat
targets,
in*
Thetext
is
a
revised
and
updated
version
of
a
TaxationSeminarat
the
London
School
of
Economics
in
December
2003.We
are
grateful
to
those
present
on
that
occasion
for
their
comments.
Responsibility
for
remaining
errors
and
omissionsremains
ours.
1.Blair
has
returned
many
times
to
this
issuesince,
as
shadowHome
Secretary,
he
supported
the
Criminal
Justice
Act
1993.
The
list
of
ten
objectives
he
delivered
at
the
2004
Brighton
Labour
Partyconference
(http://www.labour.org.uk/ac2004news?ux_
news-id=ac04tb),
28
September
2004
included
(point8)
'those
believed
tobe
part
of
organisedcrime
will
have
their
assets
confiscated'.
We
must
wait
to see
precisely
what
extension
of
the
current
law is
proposed.
2.
'...
[I]t
simply
is
not
right
in
ModemBritain
that
millions
of
law-abidingpeople
work hardtoearn
a
living,
whilst
a
few
live
handsomely
off
the
profits
of
crime.
The
undeservedtrappings
of
success
enjoyed
by
criminals
are
an
affront
tothe
hard-working
majority.'
Foreword
to
Cabinet
OfficePerformance
and
Innovation
Unit
Recovering
the
Proceeds
of
Crime
(the
P1U
Report)
(London:
Cabinet
Office,2000).
3.See,
for
example,Heba
Shams
LegalGlobalization
Money
Laundering
Lawand
OtherCases
(London:
BIICL,
2004).
353
 
354
Legal
Studies
various
ways,the
proceeds
of
crime.
4
Theseefforts
reached
at
least
a
temporary
culmination
in
the
Proceeds
of
CrimeAct
2002.
5
The
mechanisms
directedagainstproperty
are
backed
by
widespreadreporting
obligations,
set
out
in
the
Money
Laundering
Regulations
2003,6
implementing
the
Amending
EU
Directive.
7
The
increased
rate
of
seizures
and
growingrate
of
confiscation
underthe
Proceeds
of
Crime
Act
20028
and
a
number
of
decidedcases
under
the
Act
9
are
evidence
of
the
courts
'doing
their
bit'.
A
large
industry
is
now
in
place
for
thedelivery
of
the
legaland
other
services
the
need
for
which
was
generated
bythe
Proceeds
of
Crime
Act
2002.
This
article
will
dealwiththe
state
of
the
substantive
law
before
andafter
the
Act
in
one
area
of
particularsignificance
-
tax
evasion.
It is
of
great
importancebecausemost
illegallyacquiredproperty
is
not
declared
for
the
purposes
of
tax.
If
themoney
can
be
confiscated,
and
falls
within
the
scope
of
the
otherProceeds
of
Crime
Actpowers,
on
the
basis
that
itis
the
'proceeds'
of
evading
tax,
then
it maybe
unnecessary
for
the
stateagency
responsible
(whether
the
Crown
Prosecution
Service
or the
AssetsRecovery
Agency'
0
)
to
establishprecisely
by
what
other
crime(robbery,drug
dealing,
collecting
money
for
terrorist
organisations
or
whateverother
offence)
the
property
was
acquired.
Moreover,
if
the
'proceeds'
of
tax
evasion
are
within
the
scope
of
the
money
launderingoffences,
then
the
extensive
and
onerous
reporting
regime
willapply to
those
who
suspect
or
havereasonable
grounds
to
suspect
they
are
dealing
in
a
professionalcapacity(bankers,
accountants)
withpropertyacquired
by
evasion.
THE
POWERS
Since
the
Proceeds
of
Crime
Act2002came into
force,there
are
four
major
substantivepowers
(and
a
panoply
of
adjectival
ones)
that
can
be
used against
persons
suspected
of
havingprofitedfromcrime.
They
are:
(i)
confiscation;
(ii)
civil
recovery;
(iii)
taxation;
and
(iv)
criminal
liability
for
laundering.The
first
and last
are
inherited
from
the
previous
legislation,but
at
least
now
are
broughttogether
in
one
piece
of
legislation,
rather
thanbeing
found
in
two
4.
Andsee
for
thelegislation,PeterAlldridge
Money
Laundering
Law
(Oxford:
Hart,
2003)
(hereinafter
MLL)
pp
75-83.
5.
Entry
into
force
13
January
2003.
6.
SI
2003/3075.
7.
European
Parliament
and CouncilDirective2001/97/EC
of
4
December
2001
OJ
L
344
of
28.12.2001.
8.
For
latest
figures
see
http://www.homeoffice.gov.uk/crimpol/oic/proceeds/
index.html.
9.
For
example,
Re
S
(restraint
order),
S
v
Customs
and
Excise Comrs
[2004]
EWCA
Crim
2374.
10.
The
AssetsRecovery
Agency
(ARA)
was
created
by
the Proceeds
of
Crime
Act
2002,
s1.
See
http://www.assetsrecovery.gov.uk.
 
Tax
evasion
and
the
Proceeds
of
Crime
Act2002
355
placesaccording
to
whether
the
predicate
offences
were
drugrelatedor
not."
The
second
and
third
were
introduced
by
the
Proceeds
of
CrimeAct
2002.
Confiscation
Confiscation
proceedings
follow
a
criminal
conviction,but
are
not
themselvescriminalproceedings
so asto
attract
the
protection
of
Article
6
of
the
European
Convention
on
HumanRights.
2
Theidea
is
to
relieve
the
criminal
of
the
proceeds
of
thecrime.Proceeds
are
measuredgross.
3
When
the
'lifestyle'
provisions
apply,
the
burdenshiftsto
the
defendant
to
establish
on
thebalance
of
probabilities
that
he
or
shehad
acquired
property
lawfully.Otherwise
any
propertyacquired
in
the
previous
six
years
is
liable
to
confiscation.
4
Confiscation
ordershavepriority
over
the
claims
of
unsecured
creditors.
5
Civil
recovery
One
of
the
perceived
'obstacles'
on
the
'moneytrail'
relates
totherequirement
for
a
criminal
conviction
before
a
confiscation
order
canbe made.
A
criminal
conviction
requires
proof
beyond
reasonable
doubt
according
to
thecriminalrules
of
evidence.
Following
leads
from
elsewhere,specificallyIreland
and theUS,
the
Proceeds
of
Crime
Act2002
grants
the
ARA
the
power
to
bring
'civil
recovery'
proceedings
6
in
respect
of
the
proceeds
of
crime.
The
civilrecovery
procedure
operates
as
a
propertyaction.TheARAmaytrace
or
follow
it
into
the
hands
of
any
person
other
than
a
bona
fide
purchaser.
7
The
ARA
has
significantinvestigatory
and
interlocutorypowers.
8
Becausethey
are
proprietary
claims,civilrecovery
proceedings
take
priority
over
the claims
of
unsecuredcreditors.
An
amendment
by
Lord
Lloyd
of
Berwick
which
would
have
granted
the
right
to
trial
by
jury
withthe
criminal
burden
of
proof
in
place
succeeded
in theHouse
of
Lords
and
thenhad
to
be
removed
by
the use
of
the
government's
Commons'
majority.
9
Itwas
unclearwhether
ornot
the
application
of
the
civil
recovery
procedureto offencescommitted
before
the
Proceeds
of
Crime
Act2002
came
into
force
will
offend
Article
7,
but
whatdegree
of
specificity
in
making
allegations
of
criminal
behaviour
and
whatburdenandstandard
of
proof
willsatisfy
Article
6
11.
The
DrugTrafficking
Act
1994
or
the
CriminalJusticeAct
1988,
respectively.
12.
HM
Advocate
v
McIntosh
(sentencing)
[2001]
UKPC
D1;
[2001]
3
WLR
107;
Phillips
United
Kingdom
(2002)
11
BHRC
280;
R
v
Rezvi
[2002]
UKHL
1;
R
v
Benjafield
[2002]
UKHL
2.
13.
MLL,
p
133.
14.
MLL,
p
145.
15.
MLL,
p
163.
16.
Proceeds
of
Crime
Act
2002,
s
243.17.
Proceeds
of
CrimeAct
2002,
s
308.
18.
MLL,
p
169ff.
19.
MLL,
p
242ff.
19a.
See now
Director
of
the
Assets
RecoveryAgency
v
Customs
and
Excise
Commissioners
[2005]
EWCA
Civ334.

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