R v Ben Stewart Richardson

Legitimate but undeclared trading receipts may constitute criminal property under section 340(3) where proven tax evasion means that the receipts represent, at least in part, the tax withheld from the Revenue. The relevant inquiry concerns the funds in the trading account as a whole. It is not confined to whether tax had become due on an individual receipt within that account.

A mere undisclosed intention to evade tax is insufficient. An established pattern of evasion, however, may make mixed account funds criminal property. Authorities concerning confiscation under Part 2 of the Proceeds of Crime Act 2002 do not determine that distinct Part 7 question.

The applicant pleaded guilty at Maidstone Crown Court to tax-evasion offences and, on count 4, concealing criminal property contrary to section 327(1) of the Proceeds of Crime Act 2002. He received a total sentence of six years’ imprisonment.

Count 4 concerned £219,123 transferred from the account of SBR (UK) Ltd, through the applicant’s account, towards the purchase of a property. SBR (UK) had collected VAT from customers but had failed to account for it to HMRC.

Some 370 days out of time, the applicant sought leave to appeal against count 4. He contended that the sum derived from legitimate trading receipts and was therefore not criminal property. The central issue was whether the sum satisfied section 340(3) of the Act.

1. The court refused both the application for an extension of time and the application for leave to appeal against conviction. The proposed appeal was misconceived because count 4 was good in law.

2. Under section 340(3) of the Proceeds of Crime Act 2002, legitimate but undeclared trading receipts may be criminal property where they represent, in part, a benefit obtained by cheating the Revenue. A person who evades tax obtains a pecuniary advantage equal to the tax avoided. The court applied R v K(I) [2007] EWCA Crim 491, which confined the proposition in R v Gabriel [2006] EWCA Crim 229 that legitimate profits are not, merely because they are undeclared, automatically criminal property.

3. SBR (UK) had collected VAT on taxable supplies and never paid it to HMRC. Its account therefore contained funds representing unpaid VAT. The £219,123 formed part of those mixed and indivisible funds. It was immaterial that VAT on the particular Network Rail receipt had not yet become due for payment. The company’s established history of VAT evasion, rather than a merely secret intention not to declare future trading, supplied the necessary criminal context.

4. The applicant’s argument that the money belonged to SBR (UK), rather than to him, did not assist. Section 340(4) makes it immaterial who carried out the conduct or who benefited from it. He derived benefit, directly or indirectly, from the company funds.

5. Authorities concerning confiscation orders under Part 2 of the Act or its predecessors addressed different provisions and a different question. They did not displace the Part 7 analysis. Since the conviction was sound, there was no purpose in examining the circumstances of the guilty plea or the delay further.

• Court of Appeal (Criminal Division): refused an extension of time and refused leave to appeal against conviction on count 4.
• Crown Court at Maidstone: the applicant pleaded guilty on 8 November 2022 to count 4 and other offences. On 3 March 2023, he was sentenced to a total of six years’ imprisonment.