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

For a civil recovery order, the claimant must establish on the balance of probabilities that the property was obtained through unlawful conduct and that the claimed property has a causal connection with that conduct. The court need not find that a particular criminal offence was committed. It may draw proper inferences from the evidence where no credible explanation is offered.

Property remains recoverable when it can be traced into the hands of a recipient. A recovery order is required unless the statutory good-faith and change-of-position conditions are established and it would be unjust to make the order. Money laundering may provide an alternative basis for recovery where the transaction pattern and surrounding circumstances show that an account was used to disperse unlawful proceeds.

The National Crime Agency sought a civil recovery order under Proceeds of Crime Act 2002 over funds held in a bank account in the name of Niche Cars Ltd. Niche Cars had been compulsorily dissolved, so the property was bona vacantia and the Treasury Solicitor was joined as the Crown’s nominee. The claim was effectively unopposed, but the NCA retained the burden of proof.

The NCA alleged that the funds represented PAYE, National Insurance and VAT withheld by companies operating a payroll scheme, and were transferred to Niche Cars as supposed Enterprise Investment Scheme payments. It relied alternatively on money laundering. The central issues were whether unlawful conduct had occurred, whether the funds were connected with that conduct, and whether the account had been used to launder its proceeds.

1. The claim succeeded. The court made a recovery order under section 307 of the Proceeds of Crime Act 2002 over the funds and accrued interest in Niche Cars’ frozen bank account. The recovered sum was vested in the trustee for civil recovery under section 266.
2. Under sections 243, 266 and 304 of the Proceeds of Crime Act 2002, the NCA had to prove on the balance of probabilities that the property was obtained through unlawful conduct and establish a causal connection between the unlawful conduct and the claimed funds. It was unnecessary to identify or prove the commission of a particular criminal offence. The court could draw proper inferences from the circumstances in the absence of a credible explanation: [2008] EWCA Civ 104.
3. The payroll arrangements were dishonest. The Bradleygieves companies withheld PAYE and VAT which they were responsible for paying to HMRC, while the alleged EIS scheme did not exist. Niche Cars was not eligible for EIS relief under sections 173, 181, 189 and 204 of the Income Taxes Act 2007, did not trade commercially, and received substantial sums without a legitimate commercial explanation.
4. The payment pattern, including circular transfers and payments to accounts in the UAE, demonstrated that Niche Cars was directly involved in the dishonest scheme and, in any event, that its account was used to launder the proceeds. The court applied the dishonesty test identified in R v Booth and Barton [2020] EWCA Crim 575.
5. The funds were therefore recoverable property. The statutory good-faith and change-of-position exception was not engaged on the facts.