National Crime Agency v Solicitor for the Affairs of Her Majesty's Treasury

The National Crime Agency sought a civil recovery order under Part 5 of the Proceeds of Crime Act 2002 (POCA), specifically relying on ss.243 and 266, against funds held in a Barclays account in the name of Niche Cars Limited. The court found, on the balance of probabilities, that the sums in that account were recoverable property under s.304 POCA because they derived from unlawful conduct: a payroll fraud practised by the Bradleygieves companies which involved the withholding of PAYE, National Insurance and VAT. The judge also found that the account had been used to launder those proceeds. The court therefore made a recovery order under s.307 POCA and vested the recovered sum in the trustee for civil recovery under s.266 POCA.

Background and parties:

• The claim was brought by the National Crime Agency (NCA) against property deemed bona vacantia following the dissolution of Niche Cars Limited; the Treasury Solicitor (as the Crown's nominee) was the interested party and took a neutral stance.
• Niche Cars had been the recipient of payments from BGP Services Corporation Ltd (BGPSC) and other companies in the Bradleygieves group; the account was frozen by a property freezing order under s.245A POCA.

Nature of the application: The NCA sought a civil recovery order under s.243/ s.266 POCA in respect of £527,076.11 (plus interest) held in Niche Cars' bank account on the basis that those funds were recoverable property obtained through unlawful conduct (ss.304–307 POCA).

Issues framed:

• Whether unlawful conduct had occurred from which the relevant funds derived (the alleged payroll fraud and related tax offences, or alternatively money laundering);
• whether a causal connection existed between that unlawful conduct and the funds in the Niche Cars account (tracing into the account);
• whether any defence under ss.266(3)–(4) POCA (good faith, change of position, no notice, detriment) prevented a recovery order.

Evidence: The NCA relied on detailed banking schedules and financial investigation evidence prepared by Mr Andrew Coles, material from police and HMRC enquiries and prior liquidation/winding-up material. That evidence showed significant sums withheld from HMRC by the Bradleygieves companies (scheduled unpaid PAYE and VAT totalling c. £10.9m), large transfers from BGPSC to Niche Cars described as "EIS Investment" and subsequent transfers from the Niche Cars account to a United Arab Emirates account and to entities connected to Mr Bradley.

Court's reasoning and findings:

• The judge analysed the structure of the Bradleygieves operation, the absence of any genuine Enterprise Investment Scheme (EIS) involving Niche Cars, and the absence of a commercial trading pattern in Niche Cars' transactions.
• On the civil standard, the court accepted that the Bradleygieves companies had acted dishonestly and that Niche Cars (through its sole director Mr Ali) was directly involved in receiving and converting funds that represented PAYE, National Insurance and VAT withheld from HMRC.
• The pattern and circularity of payments, the lack of legitimate explanations, and the transfers to UAE accounts supported a conclusion that the Niche Cars account was used to launder the proceeds of the unlawful conduct.
• The NCA established the requisite causal connection and tracing into the Niche Cars account and no defence under ss.266(3)–(4) POCA was made out.

Result: The court made a recovery order under s.307 POCA over the frozen funds and vested the recovered sum in the trustee for civil recovery under s.266 POCA.

This was a first instance claim and the court granted the NCA's claim. A recovery order under s.307 POCA was made over the funds and accrued interest in the Barclays account in the name of Niche Cars; the amount was vested in the trustee for civil recovery under s.266 POCA. The court concluded, on the balance of probabilities, that the funds were recoverable property because they derived from dishonest conduct by the Bradleygieves companies and Niche Cars (withholding PAYE, National Insurance and VAT and related laundering), and that no s.266(3)–(4) defence applied.