Harvey, R. v (Rev 1)

In confiscation proceedings, benefit ordinarily comprises the gross value of property obtained as a result of or in connection with criminal conduct. It is not reduced by an accounting exercise for subsequent expenditure, including VAT, tax or insurance payments, where the defendant obtained the relevant receipts.

Restoration of property prevents double recovery only where restoration is total. Where a defendant has used stolen chattels for a substantial period and materially reduced their value, restoration of the depreciated chattels does not require credit for their residual value. A default term must secure compliance with a confiscation order and must not operate as additional punishment.

The appellant controlled a plant-hire company which used stolen plant in its business. He was convicted of handling stolen property and arson. In confiscation proceedings at Truro Crown Court, the judge found that the appellant had a criminal lifestyle and assessed his benefit at £2,275,454.40. The assessment included the original value of 39 stolen items of plant and 38% of the company’s receipts during the relevant period.

The appellant challenged the inclusion of VAT, the refusal to allow credit for plant restored to its owners after depreciation, and the method of using a percentage of turnover. He also challenged the ten-year default term. The central issues were the proper assessment of benefit and the effect of restoration under the Proceeds of Crime Act 2002 and A1P1.

1. The appeal was allowed only as to the term of imprisonment in default. The confiscation order for £2,275,454.40 was upheld. The default term was reduced from ten years to eight years.

2. On VAT, the total sums paid by customers for hiring stolen plant or work performed with it were property obtained as a result of criminal conduct within section 76(4) of the Proceeds of Crime Act 2002. VAT formed part of those receipts until paid over by the company. The court could not deduct VAT, income tax, national insurance, or other subsequent expenditure through an accounting exercise. The company did not hold the receipts on trust for their intended payees. R v Del Basso and Goodwin remained binding on this issue, and R v James and Blackburn and R v Ahmad were distinguishable because they concerned funds or expenses not obtained as a result of, or sufficiently connected with, the offending.

3. On restoration, R v Waya established that a confiscation order may be disproportionate where the defendant has wholly restored the proceeds of crime. That principle did not apply to stolen plant which the appellant had used for years and which had consequently depreciated substantially. This was partial, not total, restoration. The court was required to assess the property originally obtained, and neither POCA nor A1P1 required a deduction for its residual value on recovery.

4. The judge’s assessment of 38% of the company’s receipts was proper. The findings that other stolen plant had been used throughout the relevant period, that records had been falsified, and that witnesses had been dishonest justified the broad assessment. The judge was, if anything, generous: 42% of the plant found on the police raid was stolen. Receipts from plant sales were properly included because there was no reliable basis for treating all sold plant as legitimate.

5. A default term exists to secure payment, not to add punishment. Having regard to the amount already paid, the proposed disposal of assets, and comparable authorities, eight years was the appropriate term.

• Court of Appeal (Criminal Division): allowed the appeal only to reduce the default term from ten years to eight years: [2013] EWCA Crim 1104.
• Crown Court at Truro: Judge Elwen assessed benefit at £2,275,454.40 and made a confiscation order in that sum, with a ten-year term in default.