Smith, R. v

For confiscation purposes, the value of a tainted gift is governed by the specific valuation regime in the Proceeds of Crime Act 2002. A tainted gift is not to be treated as valueless merely because the offender may be unable to persuade its recipient to return it.

The rule concerning an irrecoverable debt forming part of a defendant’s free property does not govern tainted gifts. Treating unrecoverable gifts as having no value would undermine the statutory purpose of preventing an offender from reducing the available amount by giving assets away.

The appellant pleaded guilty at Leicester Crown Court to three offences of dishonestly making false statements to obtain housing and council tax benefit. Her undeclared savings meant that she had not been entitled to the benefits received.

Following conviction, the Crown sought confiscation in relation to the third count. The judge found that the appellant had no hidden assets, but treated money she had given to family members as tainted gifts and made a confiscation order for £8,394.99.

On appeal, the appellant contended that the gifts had no value because she could not recover them and would therefore be unable to satisfy the order. The central issue was whether an unrecoverable tainted gift should be valued at nil when calculating the available amount.

1. Appeal dismissed. The confiscation order for £8,394.99 stood.
2. Section 9(1) of the Proceeds of Crime Act 2002 requires the available amount to include both the defendant’s free property and the value of tainted gifts. The appellant accepted that the sums given to family members after the relevant date were tainted gifts.
3. The court held that the valuation of tainted gifts is governed by the specific regime in section 81. That regime does not make the value of a gift depend on whether the defendant can recover it from its recipient. This differs from the valuation of free property, for which the statutory scheme contains no equivalent provision.
4. Najafpour [2010] 2 Cr App R (S) 38 concerned an irrecoverable debt owed to the defendant as free property under section 9(1)(a). It did not determine the valuation of tainted gifts under section 9(1)(b). Its approach to a debt that the court was satisfied could not be recovered therefore did not assist the appellant.
5. The inclusion of tainted gifts prevents an offender from dissipating assets by giving them away before confiscation. Excluding gifts merely because their recipients could not be persuaded to return them would defeat that purpose. In any event, the Crown Court judge had not found that recovery of the gifts was impossible; he found only that the appellant had made no real attempt to recover them.

• Court of Appeal (Criminal Division): In [2013] EWCA Crim 502, dismissed the appellant’s appeal against the confiscation order.
• Leicester Crown Court: On 16 December 2011, made a confiscation order for £8,394.99 following the appellant’s guilty pleas.