Waller, R v

For confiscation purposes, a defendant who owns goods purchased as part of a planned duty-evasion enterprise has obtained property in connection with that criminal conduct. The benefit is the value of that property and is not confined to the duty evaded or to net profit. The statutory term property cannot be rewritten as profit.

Accordingly, where tobacco is acquired with the intention of importing it without payment of excise duty, the recoverable benefit may include both its purchase value and the evaded duty.

The appellant pleaded guilty to being knowingly concerned in the fraudulent evasion of duty on the importation of 250 kilograms of hand-rolling tobacco. He had bought the tobacco abroad with funds supplied by himself and others, intending to evade excise duty on its importation.

The Crown Court at Maidstone made a confiscation order for £41,505. That sum comprised £14,000 as the value of the tobacco and £27,505 as the duty evaded. The appellant accepted the amount of duty but contended that legitimately purchased tobacco could not also constitute benefit.

The appeal concerned whether property bought for a duty-evasion venture was obtained in connection with the criminal conduct and, if so, how its value should be calculated.

1. Appeal dismissed. The Crown Court was entitled to assess the appellant’s benefit at £41,505, comprising the £14,000 value of the tobacco and £27,505 evaded duty.

2. Under section 76 of the Proceeds of Crime Act 2003, the court had to determine whether the appellant had benefited from criminal conduct and whether he had obtained property as a result of, or in connection with, that conduct. He owned the tobacco when he bought it. Its acquisition was integral to the intended evasion of duty and fell within both statutory connections.

3. Applying the ownership analysis in R v May [2008] UKHL 28, ownership ordinarily establishes that property has been obtained. The statutory inquiry concerns the property obtained, not merely the financial advantage represented by the unpaid duty.

4. The court applied the approach discussed in R v David Cadman Smith. Benefit is assessed by the value of property obtained and is not reduced to net profit after deducting the costs of the criminal operation. It also approved the directly analogous reasoning in R v McCrarren & McCrarren [2007] NICC 9, that the foreign purchase cost is a necessary element of the property’s value.

5. The earlier duty-only decisions did not decide a claim for both the goods’ value and the evaded duty. Although the outcome could appear harsh, it followed the statutory language and did not produce an impermissible substitution of profit for property.

• Court of Appeal (Criminal Division): Dismissed the appeal against the quantum of the confiscation order.

• Crown Court at Maidstone: On 12 September 2007, made a confiscation order of £41,505 under section 6 of the Proceeds of Crime Act 2003.