The law relating to confiscation proceedings under the Proceeds of Crime Act 2002 (POCA) is complicated and often called " draconian". It is meant to deprive a convicted defendant of the benefit of their criminal conduct.

"Benefit" is defined as the value of property obtained by them or in connection with their criminal conduct. Having assessed the benefit figure, the court will identify what is the "available amount" - what assets are available to the defendant at the time the order is made that can be realised to pay the benefit figure. The available amount can include assets that are entirely legitimate.

A confiscation order is made against a convicted defendant personally. However, there may be competing interests in relation to the available assets.

In Crown Prosecution Service (Appellant) v Aquila Advisory Ltd (Respondent) [2021] UKSC 49, the Supreme Court rejected the appeal of the CPS to recover nearly £1.5m from two men convicted for cheating the public revenue.  

The defendants were directors of Vantis Tax Ltd (VTL) who exploited their position in breach of their fiduciary duty to make a secret profit of £4.55m. That sum was also the benefit obtained by them from cheating the public revenue by dishonestly facilitating and inducing others to submit false claims for tax relief. VTL went into administration. Aquila Advisory Ltd (Aquila) was assigned VTL's proprietary rights.

Aquila argued that, because it had a proprietary claim to the secret profit of £4.55m, its claim took priority over the confiscation orders, which did not give the CPS any form of proprietary interest.

The Supreme Court ruled that Aquila could recover what remained of the relevant funds (originally £4.55m) from the directors because they had acted in breach of their fiduciary duty to the company and held the proceeds of the crime on constructive trust for the company. This meant that nothing was left to satisfy the orders obtained under POCA. 

Aquila was entitled to assert its claim in priority to the POCA orders and the illegality of directors could not be attributed to company in confiscation proceedings.

The CPS was not doubt hoping the Supreme Court would expand the scope of corporate criminal liability to the confiscation stage. POCA is designed to remove the proceeds of crime from criminals, rather than innocent parties.  

The Law Commission is due to publish the detailed review of corporate liability for economic crime in early 2022. It will be interesting to see how POCA proceedings will feature.