Tainted gifts during confiscation can complicate an already tricky situation. However, are you aware of the difference between a gift and a tainted gift — and how it can affect a Proceeds of Crime Act (POCA) Confiscation case?
In this blog we will discuss this and much more besides. Find out more about tainted gifts and ensure that you remain as protected as possible.
What is a Tainted Gift During Confiscation Proceedings?
During confiscation proceedings, the word gift takes on whole new connotations. A tainted gift in this context refers to the gifting of an asset or money to another person without the intention of receiving anything, or receiving something financially unequal in return. An example of this would be a defendant giving another party £5,000 and either receiving nothing in return or receiving less than this initial figure back.
Additionally, a gift in confiscation terms can relate to an asset that is sold to another party if the sale price is seen to be significantly lower than the item’s value.
What is a Tainted Gift?
The Proceeds of Crime Act (POCA) states that a gift made by a defendant to a third party may be deemed as a tainted gift. This means that it is, as far as the courts are concerned, available for confiscation as part of a confiscation order and used to help pay any debts.
For a gift to be seen as a tainted gift it must be given by a defendant — its contents are not relevant. The protocol behind identifying whether a gift is tainted or not will depend on the lifestyle the defendant lived prior to their case:
If the Defendant Did Not Live a Criminal Lifestyle
If the defendant in question is deemed not to have lived a ‘criminal lifestyle’ then a gift will be seen as tainted if it was made from — or on — the day in which the offence was committed.
For example, if a defendant is sentenced for fraud between 1st January 2021 and 31st December of the same year, should they have given a gift on, after, or at any time between these two dates, then that asset may be seized as part of a confiscation order. Anything given before will not.
If the Defendant DID Live a Criminal Lifestyle
In the event that the defendant in question is deemed to have lived a criminal lifestyle, then a gift may be deemed as tainted in one of two particular situations:
- Any exchanged assets or monies can be seen to be tainted if it is given on or after the ‘relevant day’. The relevant day is the first day of a six year period prior to the legal proceedings against the defendant starting. In the event of multiple days, the relevant day will be the earliest date.
- A gift can also be tainted if it was obtained by the defendant as a clear result of, or in direct connection with, their criminality.
What is a Criminal Lifestyle?
As stated in the POCA 2002, the concept of a criminal lifestyle is based on the idea that an offender who is seen to have directly lived off their crimes should account for these assets. Therefore they should be able to be confiscated so the defendant is no longer able to benefit.
Under Section 75, a person can be deemed to have a criminal lifestyle if they meet one or more of a set of criteria. These criteria are:
- If the defendant is convicted of any offence specified in schedule 2 of the POCA. This includes production or supply of controlled drugs, possession with intent to supply, improper importation of goods, and more.
- A defendant was convicted of an offence committed over more than a six month period, having unlawfully obtained £5,000+ as a result of said offence.
- The defendant has been convicted of a combination of offences that amount to ‘a course of criminal activity’. This means being convicted of four offences at the same time of being convicted separately of two such offences in a six year period prior to the ongoing conviction.
Can a Tainted Gift be Claimed Back in Law?
A third party who has received a tainted gift from a defendant may be required to return it/it may be seized. This is because these assets will be seen as still legally belonging to the defendant, and therefore able to be restrained, or even sold, should the courts permit the prosecution to appoint an Enforcement Receiver to the case.
The question of whether a tainted gift can be claimed back by law is often more complicated when a spouse is involved. A gift to a spouse can be deemed as tainted. However, since spouses will regularly share their money and assets, it would be difficult to assess whether any and all of this constitutes a tainted gift. Even so, any significant sums of money transferred, or large gift outlays, may be seen as tainted and therefore be claimed back.
Tainted Gifts and POCA Confiscation
In the process of confiscation order proceedings, it will be expected that the defendant will pay back whatever they have available to them at that time. If a tainted gift has been given, the value of this gift at the time of its transfer will likely be added.
However, after money and assets are seized, and enforcement has taken place, the courts may decide to appoint a receiver to recover any tainted gifts given. In this situation, the third party who received the tainted gift is within their rights to seek their own representation.
The defendant, if found on the receiving end of POCA confiscation and tainted gifts, may be required to serve a sentence in default of payment should it be necessary.
How Inquesta Forensic Accountants Can Help
If you’re facing potential confiscation order issues, it’s vital that you get in touch with somebody experienced in the subject, particularly if there is a possibility of tainted gifts further complicating the situation. A Forensic Accountant will have all of the skills necessary to fight your corner and protect your best interests.
By utilising a meticulous, detailed approach in everything we do, our team of experts will be able to argue and rebut potential tainted gift allegations and put you in the best position possible.
Inquesta’s team of Forensic Accountants have decades of experience when it comes to supporting clients in a wide variety of case types — from Business Interruption Claims, Financial Crime, Commercial Dispute Resolution and much more besides. This great variety in skill set means we are perfectly placed to support you, no matter what issue you might be facing.
For a specialist Forensic Accounting service, get in touch today or book a free zero-obligation consultation today.
