Steed v R.

A fraudulent omission to disclose a liability to tax can amount to cheating the public revenue. The resulting benefit includes tax payment avoided or deferred, including an existing payment-on-account liability.

For confiscation under the Proceeds of Crime Act 2002, connected omissions pursued for a common purpose may constitute one continuing offence committed over at least six months. A defendant relying on legitimate trading must prove the extent to which particular assets and expenditure derived from it. An unidentified legitimate element does not rebut the statutory assumptions or, without more, establish a serious risk of injustice.

Gareth Edward Steed pleaded guilty at Cardiff Crown Court to cheating the public revenue by fraudulently failing to disclose tax due. The Crown Court made a confiscation order of £707,200, with four years’ imprisonment in default, after finding that he had a criminal lifestyle under the Proceeds of Crime Act 2002.

He appealed on the grounds that the offence produced no qualifying benefit, was not committed over at least six months, and that the statutory assumptions concerning his property and expenditure had been rebutted or would cause serious injustice. The central issue was whether lawful but undeclared trading income could displace those assumptions where the sources of assets and expenditure could not be separated from other criminal activity.

1. Appeal dismissed. The appellant’s admitted fraudulent failure to notify the Revenue of his liability to tax was conduct intended to avoid tax. It was capable of amounting to cheating the public revenue. Fraudulent cheating may be committed by concealment or omission as well as by a positive false representation: see R v Hudson [1956] 2 QB 252 and R v Majvi [1987] 84 Cr App R 34.

2. The tax avoided for 2002–2003 was £3,558. The appellant also avoided an existing obligation to make an equivalent payment on account for 2003–2004. That latter liability was subject to statutory adjustment, but was not merely provisional. His benefit therefore exceeded £5,000 for the purposes of the Proceeds of Crime Act 2002.

3. The count alleged a continuing failure and a continuing cheat. The connected omissions had a common purpose and formed one criminal enterprise. They could properly be included in one count as a course of conduct, consistently with DPP v Merriman [1973] AC 584. The guilty plea therefore admitted an offence committed over at least six months, and the Crown Court was entitled to find a criminal lifestyle.

4. The Crown Court had erred in equating legitimate “moonlighting” trading, on which tax had not been paid, with general criminal conduct. Where a trader proves that particular assets or expenditure derived from legitimate trading, the fact that tax was evaded does not itself make the whole trade criminal conduct. That approach was consistent with R v Moran [2002] 1 WLR 205.

5. That error did not affect the result. The judge had also found other criminal activity and had rejected the appellant’s account of his income. In a mixed legitimate and illegitimate business, the defendant bears the burden of showing the relevant proportions. He could not prove the source of any given asset or expenditure, and so could not show that the statutory assumptions were incorrect. The unknown extent of legitimate activity also gave no basis for finding a serious risk of injustice. The confiscation order therefore stood.

• Court of Appeal (Criminal Division): dismissed the appeal in [2011] EWCA Crim 75 and upheld the confiscation order.
• Crown Court at Cardiff: on 9 October 2009, made a confiscation order of £707,200 following the appellant’s guilty plea to cheating the public revenue.