Department for Works and Pensions v Richards

For confiscation under section 71 of the Criminal Justice Act 1988, an offender’s benefit is assessed when the property or pecuniary advantage is obtained. It is not reduced by a hypothetical tax credit or other financial return which might have been available had the offender acted honestly.

Section 71(1B) imposes a duty to make the order and affords no discretion based on hardship. The discretion in section 71(1C) arises only where a victim has instituted, or intends to institute, civil court proceedings. An administrative statutory recovery scheme, benefit deductions, and a recovery letter do not amount to such proceedings.

Mr Richards pleaded guilty to specimen offences of dishonestly making false statements to obtain social-security benefits. After further offences were taken into consideration, Lewes Crown Court imposed concurrent custodial sentences and a confiscation order of £19,424.30.

The order allowed for notional Family Credit, but not for notional Working Families Tax Credit. Mr Richards appealed, contending that the latter credit should reduce his benefit under section 71 of the Criminal Justice Act 1988, or that the Department’s overpayment-recovery process engaged the discretionary civil-proceedings exception in section 71(1C).

The central issues were whether hypothetical tax credit reduced criminal benefit and whether the statutory recovery regime constituted civil proceedings.

1. Appeal dismissed. The confiscation order was correctly made.

2. Under section 71(4) of the Criminal Justice Act 1988, benefit is fixed when the offender obtains the property or derives the pecuniary advantage. The court applied the approach stated in R v May [2005] EWCA Crim 97 and R v Smith [2002] 1 WLR 56. Later destruction, transfer or dissipation of the property does not reduce that benefit.

3. For the same reason, no deduction was available for a notional Working Families Tax Credit which might have been claimed if the offender had acted honestly. Such a hypothetical payment was not property obtained through the offending. It was not a debt owed by the victim to the offender. The court accepted the reasoning in R (on the Application of Larusai) v Secretary of State for Work and Pensions [2003] EWHC 371 (Admin).

4. Section 71(1B) imposed a duty to make an order for the statutory amount. The potential loss of the family home could not create a discretion under that subsection: R v Roissetter [2004] EWCA Crim 1827.

5. Section 71(1C) was not engaged. Civil proceedings require invocation of the court’s civil jurisdiction by issue and service of a claim form under Part 7 or Part 8 of the CPR. The Department’s recovery letter and its separate statutory recovery mechanisms neither instituted, nor showed an intention to institute, civil proceedings.

• Court of Appeal (Criminal Division): dismissed Mr Richards’s appeal against the confiscation order: [2005] EWCA Crim 491.
• Lewes Crown Court: imposed concurrent four-month sentences and a confiscation order of £19,424.30 after the defendant’s guilty pleas and further offences taken into consideration.
• Central Sussex Magistrates’ Court: Mr Richards pleaded guilty to nine specimen social-security offences.