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18 March 2015 / by / in

What is the value of an illusory benefit?

We are currently instructed in a case in which the Court of Appeal has certified the following question of public importance for consideration by the Supreme Court.

” When importers of uncustomed goods conspire not to pay the required duty and value added tax at the point of importation, and the goods are, before resale, seized and forfeited by Her Majesty’s Revenue and Customs, in confiscation proceedings under the Proceeds of Crime Act 2002:

  1. Do the importers obtain ‘benefit’ from their criminal conduct within the meaning of sections 6 and 76 of the Proceeds of Crime Act 2002?
  2. Are confiscation orders in the sum of the duty and value added tax unpaid by the conspirators a ‘proportionate’ means of depriving them of the benefit of their criminal conduct for the purposes of Article 1 of the First Protocol to the European Convention on Human Rights?”

If leave to appeal is granted, the Supreme Court will re-visit the decision of  R v Cadman-Smith [2001] UKHL 68, decided with a majority of 3 to 2in the House of Lords in December 2001. Cadman-Smith is demonstrative of the punitive manner in which the proceeds of crime legislation can operate.

Mr Cadman-Smith had his boat seized, his cargo of £1.25 million worth of illicit cigarettes seized, and was additionally subject to a confiscation order for £130,660.40, representing the excise duty which would have been payable on his cargo.

This decision has been criticised for its unfairness by many commentators , who consider that it is inappropriate to utilise the provisions of the Proceeds of Act 2002 to, effectively, impose a fine. Until now Cadman-Smith has stood, however we may soon find out from the Supreme Court whether or on it is still good law.

John Bechelet

John specialises in commercial and civil fraud litigation. Admitted as a solicitor in 1983, John worked in private practice and in-house for a leading life assurance company before establishing Bivonas with Antony Brown in 1997. John has extensive experience in a wide range of courts and tribunals including the UK Supreme Court, the Court of Appeal and the Divisional Court. He has been involved in a number of important reported cases.

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