Sangha & Ors, R. v

In confiscation proceedings, the judge must act consistently with the jury’s verdict and its factual basis. The statutory questions are nevertheless separate from the trial. Applying the civil standard of proof, the judge may make additional findings from all the evidence when deciding benefit.

Under Criminal Justice Act 1988, section 71, property obtained from onward trading may be obtained in connection with an offence where the defendant knowingly used it to facilitate the revenue fraud. That conclusion may be available even if the immediate pecuniary advantage from the tax evasion was obtained by another person.

The appellants were convicted after a jury trial of cheating the public revenue through their participation as buffer traders in a VAT carousel fraud. Confiscation orders were subsequently made in Worcester Crown Court under Part VI of the Criminal Justice Act 1988.

The jury had been directed that the appellants’ relevant role was dishonestly paying VAT on purchases from missing traders to foreign suppliers, knowing that they were participating in a revenue fraud. On appeal, they contended that this limited factual basis prevented a finding that they had benefited from their offences. The central issue was whether the sentencing judge could make further findings on the evidence and treat part of the proceeds of onward sales as property obtained in connection with the offences.

1. The appeals were dismissed. The confiscation judge was entitled to find that each appellant had benefited from his relevant criminal conduct and to make the resulting confiscation order.

2. A jury verdict and its factual basis set an important limit: the judge in confiscation proceedings must not make findings inconsistent with them. But the statutory determinations of benefit, amount of benefit and recoverable amount are separate from the trial. They are made by the judge on the civil standard of proof. The judge may therefore make further and more extensive findings from the evidence, provided that they remain consistent with the verdict. The court followed R v Threapleton [2001] EWCA Crim 2892 and explained that the sentencing principle in R v Canavan, Kidd and Shaw [1998] 1 WLR 604 did not impose the limitation advanced by the appellants.

3. The only relevant criminal conduct was the offence of cheating the public revenue of which each appellant had been convicted. Although the immediate pecuniary advantage from the missing traders’ VAT evasion was obtained by Hening rather than the appellants, that did not prevent a finding under section 71(4) of the Criminal Justice Act 1988. The appellants knowingly obtained proceeds from onward sales and used the relevant part to pay the VAT element of their purchases to the foreign suppliers. Those sums were property obtained in connection with the offence.

4. The expression “in connection with” has a broad potential scope, reinforced by section 102(5). The court applied the statutory language directly to the facts, consistently with R v May [2008] UKHL 28. The proceeds were not comparable to proceeds of genuine trading followed by a mere failure to account for tax, the situation addressed in R v Gill [2005] EWCA Crim 2697. The judge had a rational basis for limiting benefit to the sums used to pay the VAT element, and the court did not need to decide whether he could have gone further.

• Court of Appeal (Criminal Division): dismissed the appellants’ appeals against confiscation orders.
• Worcester Crown Court: following jury convictions in June 2006 for cheating the public revenue, HHJ McCreath made confiscation orders on 4 April 2007 under Part VI of the Criminal Justice Act 1988.