Review of flawed tobacco-smuggling Confiscation Orders

Mark Taylor of Vantis highlights a recent development in respect of confiscation orders.

Introduction

The Revenue & Customs Prosecution Office (RCPO) is undertaking a review of every Confiscation Order made since 1 June 2001 in respect of tobacco-smuggling cases as a result of a recent Court of Appeal case in which RCPO admitted that it overlooked a change in HM Revenue & Customs (HMRC) Regulations, and has erroneously been calculating benefit measures in confiscation proceedings. This review, to identify any case in which the wrong Regulations were directly or indirectly relied upon, comes at a time when RCPO is preparing to be merged with the Crown Prosecution Service (CPS) expected during 2009-2010.

Benefits

One of the ways in which a defendant may obtain a benefit (for the purposes of a Confiscation Order) is when he has obtained a pecuniary advantage as a result of, or in connection with, his offence or criminal conduct. In smuggling cases, a person obtains a pecuniary advantage and a benefit, inter alia, if he is personally liable to pay the unpaid duty at the relevant excise duty point. The pecuniary advantage is equal to the duty evaded.

From 1 June 2001, Regulation 13 of the Tobacco Products Regulations (SI 2001 No 1712) superseded Regulation 5 of the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations (SI 1992 No 1315). It changed and narrowed the categories of person liable to pay excise duty countable as benefit in tobacco-smuggling cases.

Under Regulation 13, the persons liable for the duty are:

• The person holding the tobacco products at the excise duty point; and
• any person who caused the tobacco products to reach an excise duty point.

The new Regulations do not use the expression "importer" and they exclude the consignee, who was previously made liable.

Recent Cases

The error first came to light in the Court of Appeal in R v William Chambers [2008] EWCA Crim 2467. In this case, the Crown had made nothing more than a factual assertion that the defendant had caused the tobacco products to reach an excise duty point. No such finding was made by the trial judge, nor was the case presented in a way that invited the trial judge to make such a finding of fact. Therefore, the Confiscation Order was quashed.

More recently, three further tobacco-smuggling cases - R v Robert Khan, R v Frank Lockett and R v Daniel Carrington [2009] EWCA Crim 588 - came before the Court of Appeal. These were the first to reach the appeal court following the discovery in R v William Chambers and again the Confiscation Orders were quashed in each case.

Additional Points

It will be interesting to see the outcome of RCPO's review and how many additional tobacco-smuggling Confiscation Orders will be quashed or varied. However, there are further issues that arise and need to be addressed:

• What will be done to compensate a defendant who has had to sell assets, possibly their family home, to pay a Confiscation Order that is later held to be flawed? 
• Have any of these defendants received a default sentence for being unable to pay the Confiscation Order and been wrongly imprisoned? 
• Are financial compensation claims likely to be made against RCPO? 

It is understood that RCPO will be issuing letters of notification to every relevant defendant to confirm its stance in relation to the Confiscation Order issued in their own case. Any tobacco-smuggling defendant who was subject of a Confiscation Order made on or after 1 June 2001 should seek urgent specialist advice to review the accuracy of the order made against them.

Contact For Further Information

Please contact either Don Mavin or Mark Taylor on 0207 417 0417 if you would like to discuss any of the issues highlighted above.

Mark Taylor is a member of the Tax Disputes & Litigation team, Vantis.

Article Added Saturday, 06 June 2009

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