Piacentini v Dayman

A receiver appointed under the Criminal Justice Act 1988 is not personally assessable to capital gains tax or income tax arising from realisations of the defendant’s property. The tax liability remains that of the defendant. The statutory reference in the Taxes Management Act 1970 to a court-appointed receiver being assessable does not alter that conclusion where the underlying premise of liability for an out-of-court receiver is unsound.

The defendant’s tax liability is not an expense of the receiver payable from realisation proceeds under sections 81(5) or 88(2) of the Criminal Justice Act 1988. The statutory scheme exhaustively identifies the permitted applications of those proceeds and prevents them being used to discharge the defendant’s continuing tax liabilities.

Sara Dayman, the receiver appointed under section 77 of the Criminal Justice Act 1988, sought directions concerning realisations made during the receivership of Peter Piacentini’s property. A confiscation order of £2.1 million was made after Piacentini’s conviction, and the receiver realised assets and paid more than £2 million towards satisfaction of that order.

The application concerned whether the receiver was personally liable for capital gains tax or income tax arising from those realisations and, if not, whether Piacentini’s tax liability was nevertheless payable as an expense of the receivership under sections 81(5) and 88(2) of the Criminal Justice Act 1988.

1. The receiver was not personally assessable to capital gains tax or income tax on realisations of the defendant’s property. Sections 75 and 77 of the Taxes Management Act 1970 were exceptionally difficult to construe, but did not compel a conclusion that a court-appointed receiver incurred personal liability.

2. The reasoning in IRC v Thompson [1937] 1 KB 290, that a receiver received income in fact and was therefore subject to the charge, failed to give proper weight to the receiver’s agency. The references to Richards v Overseers of Kidderminster [1896] 2 Ch 212 did not support receiver liability, and Radford and Hayward v Northavon RDC [1987] QB 357 supported the contrary analysis.

3. The conclusion was reinforced by the statutory scheme. The Criminal Justice Act 1988 contained no provision for the receiver’s tax liability, ring-fencing of assets for that liability, or an indemnity. Its policy was that the tax liability remained that of the defendant.

4. The defendant’s tax liability was not an expense of the receiver under sections 81(5) or 88(2). Unlike the liquidator in In re Mesco Properties Ltd [1980] 1 WLR 96, the receiver was not made the proper person to pay the tax. Section 82(6) further prevented the proceeds available to satisfy the confiscation order from being depleted by payment of the defendant’s tax liabilities.

5. The court had no jurisdiction to direct the receiver to pay the tax. Such an order would be inconsistent with the statutory scheme, particularly section 82(6).