Where a person misappropriated money from a company as an essential part of a fraud on the Inland Revenue and was convicted, he was liable to a confiscation order in the amount of the monies that had been appropriated on the basis that the monies were property obtained as a result or in connection with the fraud.Appeal against a confiscation order made against the appellant ('D') after D had pleaded guilty to a charge of cheating the public revenue. D was the chairman of a company who had arranged for substantial sums of money received from his company's customers to be paid into a TSB account in the company's name. The existence of this account was not declared to the company's auditors, the monies were not declared for tax and D used the monies largely for his own private purposes. The judge concluded that D had obtained a benefit "as a result of or in connection with" the offence pursuant to s.71(4) Criminal Justice Act 1988 and made a confiscation order for the full amount of monies paid into the TSB account. On appeal D submitted that: (i) the judge ought to have held that D had obtained a "pecuniary advantage" within s.71(5) of the Act in the amount of unpaid tax only; and (ii) in any event there should have been a credit against that benefit in the sum of ?125,000 which had been paid on account of VAT after D faced proceedings.HELD: (1) Even if the approach taken was that there were really two offences, namely cheating the Revenue and stealing monies from the company, this would not have assisted D. The removal of the greater part of the monies from the account for D's purposes would have been an essential part of an overall scheme having the combined purpose of defrauding the Revenue and benefiting D. On that approach the monies D obtained would still have been monies in connection with the commission of the offence of cheating the Revenue. Therefore the judge had been right to conclude that the case fell within s.71(4) of the Act. The benefit had been correctly assessed. (2) D's assertion that the case fell within s.71(5) of the Act faced insuperable difficulties. The tax was not due from D but from the company. The tax avoided or attempted to be avoided was only a pecuniary advantage obtained by the offender if: (a) the tax was tax for which the offender himself was liable; or (b) where the companies involved were fronts for the offender and it was appropriate to pierce the corporate veil. (3) Where a person misappropriated money from a company as an essential part of a fraud on the Revenue and was convicted of that fraud, he was liable to a confiscation order in the amount of the monies that he had misappropriated on the ground that the monies were property obtained as a result of or in connection with the fraud. (4) No account should have been taken of the payment made by the company in respect of VAT after the discovery of the fraud. D had had the benefit of the money in the account regardless of whether it was notionally VAT money or not. The company had remained liable for VAT.Appeal dismissed.

[2003] EWCA Crim 270

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