Richardson, R. v

Factual and Procedural Background

On 8 November 2022, in the Crown Court at Maidstone, the Appellant pleaded guilty to multiple offences including four counts of fraudulent evasion of VAT, concealing criminal property, fraud by failing to disclose information relating to Construction Industry Scheme returns, and fraudulent evasion of PAYE income tax and National Insurance Contributions. Some VAT fraud counts were ordered to lie on the file. On 3 March 2023, the Appellant, then aged 47, was sentenced to a total of six years' imprisonment, with sentences running concurrently. A timetable for confiscation proceedings under Part 2 of the Proceeds of Crime Act 2002 ("POCA") was set and has now commenced.

The Appellant seeks an extension of time of 370 days to apply for leave to appeal against the conviction on the count of concealing criminal property (count 4). This application was referred to the full court by a single judge.

Count 4 was charged under section 327(1) of POCA 2002 for concealing criminal property, specifically monies amounting to £219,123, alleged to be benefit from criminal conduct. The Appellant's newly instructed attorney argues that this sum was not criminal property and that the guilty plea was entered under a mistake of law. The Appellant's co-accused include his wife, who was not convicted of concealing criminal property, and his sister, who pleaded guilty to that count but does not join the appeal.

The offences arose from the operation of various companies involved in the supply and installation of modular buildings in the construction industry. The total tax evasion was over £2 million, involving several companies controlled by the Appellant and his associates. The count of concealing criminal property related to the purchase of a property financed by funds alleged to derive from VAT evasion by one of these companies. The prosecution contended the deposit was criminal property as it was funded by fraudulent VAT evasion.

Legal Issues Presented

1. Whether the sum of £219,123 constituted "criminal property" under section 340(3) of the Proceeds of Crime Act 2002.
2. Whether the Appellant's guilty plea to concealing criminal property was entered under a mistake of law.
3. Whether the extension of time to apply for leave to appeal against the conviction on count 4 should be granted.

Arguments of the Parties

Appellant's Arguments

• The £219,123 was drawn from legitimate trading receipts of the company and was not criminal property.
• The company could lawfully use its receipts, including payments to directors and staff, before VAT became due.
• The money belonged to the company, not the Appellant or his sister, and thus was not benefit from criminal conduct.
• The Appellant should not have pleaded guilty to count 4 as the funds were not criminal property.

Respondent's Arguments

• The Appellant voluntarily pleaded guilty to count 4.
• The £219,123 was criminal property as it derived from the company's bank accounts on which VAT was evaded.
• The money represented benefit from criminal conduct as the company obtained a pecuniary advantage by evading VAT.
• The statutory provisions apply even if the funds came from the company rather than directly from the Appellant.
• The charge of concealing criminal property is legally sound and the application for extension of time and leave to appeal should be refused.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by examining the statutory provisions under Part 7 of POCA 2002, particularly section 327(1) and the definitions in section 340. The central question was whether the £219,123 constituted "criminal property," meaning it represented a person's benefit from criminal conduct and that the offender knew or suspected this.

The court reviewed relevant case law, notably R v Gabriel, which held that legitimate trading profits not declared for tax do not automatically become criminal property. However, this was narrowed by R v K(I), which established that undeclared takings from legitimate trading, where tax has been evaded, do amount to a pecuniary advantage and thus criminal property under POCA.

The court found that the funds in the company's account, including the £219,123, were criminal property because they represented VAT collected but not paid over to HMRC, constituting a benefit from criminal conduct. The fact that the funds originated from the company rather than the Appellant personally was immaterial under the statutory definition, which covers indirect benefit.

The court rejected the Appellant's argument that the funds belonged to the company and could not be imputed to him, noting that the Appellant derived a benefit from those funds. Furthermore, the court found no merit in the Appellant's focus on the timing of the VAT accounting or the isolated receipt from Network Rail, emphasizing the indivisibility of the funds in the company account and the established pattern of VAT evasion.

In conclusion, the court agreed with the prosecution that the £219,123 was criminal property and that the Appellant's arguments were misconceived.

Holding and Implications

The court REFUSED the application for an extension of time to apply for leave to appeal against the conviction on count 4 and REFUSED the application for leave to appeal itself.

The direct effect is that the conviction on count 4 stands, maintaining the basis for the confiscation proceedings under POCA 2002. No broader precedent beyond the authoritative application of existing case law was established, although the court noted that this judgment may be cited in future cases raising similar issues.