Top Court Shows Hurdles For Prosecutors To Seize Assets

Top Court Shows Hurdles For Prosecutors To Seize Assets

BCL senior associate Alex Swan has been quoted discussing a decision by the U.K. Supreme Court that prevented the Crown Prosecution Service from recovering profits from a tax avoidance scheme, in an article from Law360.

Here’s an extract from the article:

By upholding findings that the unlawful acts of directors cannot be attributed to their company, Britain’s highest court emphasized the difficulties prosecutors face when making decisions about whether to bring charges.

Justices exposed the dangers of prosecuting and seeking confiscation against individual defendants but failing to pursue the corporate entity, which may have a right to the illicit proceeds, for the same offenses.

“Prosecuting companies can be difficult, but the failure to consider charging a company could mean that, years down the line, the prosecution are unable to recover monies through confiscation proceedings,” Alex Swan of BCL Solicitors LLP said.

Forensic accountant Aquila Advisory Ltd. emerged victorious for the third time in the long history of the proceedings, beating the CPS to £4.55 million ($6.2 million) in “secret profits” earned by the former managers of a now-defunct tax adviser.

Aquila, which is paying a portion of the proceeds to creditors, acquired the rights to the litigation from the adviser, Vantis Tax Ltd. The High Court and the Court of Appeal had found that the prosecuting agency had no better rights than Aquila to recover the money, even though VTL had not lost money and stood to profit from the illegal acts.

Justices at Britain’s highest court agreed. The found that there “can be no exception” to the principle that a director who breaches his or her duties to the company cannot keep the resulting profit, and cannot ascribe their own illegal acts to the company to allow them to defeat a claim against them by that company.”

“The Serious Fraud Office has called on lawmakers to lower the bar for attributing the crimes of directors to the company after resounding defeats in the prosecution of companies.

The ruling is a “reminder that prosecuting authorities need to think about their asset recovery options from the outset,” according to Alex Swan of BCL.

“Prosecutors will often be engaged in considering whether they will be able to prove complex tax fraud allegations to secure a conviction, and so the particular mechanics of confiscation proceedings may not always be at the forefront of their attention,” he said.”

This article was originally published by Law360 on 04/11/21. You can read the full version on their website here.

Alex Swan is an experienced Senior Associate who has worked on a variety of complex and high-profile criminal matters.  He specialises in corporate and financial crime and has extensive experience of advising clients at all stages of investigations and prosecutions.  He is adept at dealing with complex cross-border matters, including where there are simultaneous investigations taking place in other jurisdictions.  Alex regularly deals with matters being investigated and prosecuted by the SFO, the CPS, HMRC, the NCA, and the FCA, as well as by foreign authorities such as the DOJ, SEC, PNF, CBI and ED.

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