Roger Isaacs is a Chartered Accountant and partner of Milsted Langdon LLP. He is an Insolvency practitioner, commercial mediator and forensic accountant. Here he looks at confiscation orders.
Undischarged confiscation orders last for life and cannot be expunged even by bankruptcy
It is now almost a decade since confiscation orders began being made against convicted criminals under the Proceeds of Crime Act 2002. The legislation provides that, in appropriate circumstances, the Court can make a confiscation order for the amount by which the defendant has benefitted from his or her illegal activity. However, the amount payable by the defendant is limited to whatever assets he or she has available at the relevant date.
Importantly, the difference between the amount of the confiscation order and the amount deemed to be available remains as an outstanding debt payable by the defendant at some unspecified future date. This debt cannot be expunged even by bankruptcy.
This raises the interest in public policy question as to what incentive such an individual has for “going straight”.
To date, the government has taken no steps to review its archive files of confiscation cases to determine whether there may now be opportunities to recover additional sums in relation to confiscation orders made several years ago in circumstances such as those described above.
The fact that it has not done so does not mean that it will not choose to do so in the future. Indeed an analogy can perhaps be drawn with the insolvency regime that existed during the late 1990’s. At that time many thousands of individuals went bankrupt in circumstances in which their homes were in negative equity. Although these properties automatically vested in the Official Receiver, bankrupts were typically given an option to reacquire their interests for a nominal fee. Many failed to do this which resulted in their homes, or in the case of jointly owned property, their share of their homes remaining vested in their bankruptcy estates.
“Very rude shock”
Years later the government established a department known as the Protracted Realisations Unit to review these old insolvency cases. It came as a very rude shock to the bankrupts in question to receive a letter many years after they had been discharged from bankruptcy, noting that their homes had greatly increased in value and that associated mortgages had largely been paid off and insisting that the properties be sold to discharge the bankruptcy debts plus interest and costs. The resulting publicity led to a change in the law but it was not retrospective and it did nothing to help those facing claims from the Protracted Realisations Unit most of whom lost their homes.
It is not difficult to envisage a unit being set up at some point in the future to undertake a similar exercise in relation to outstanding confiscation orders. For that reason it remains extremely important for those advising defendants who face confiscation claims to put just as much effort into reducing, where possible, the quantum of the confiscation order itself as into reducing the available amount.
For further information, contact Roger Isaacs at www.milsted-langdon.co.uk