Interest on Proceeds of Crime Act confiscation orders

When a confiscation order is made in the Crown Court under the Proceeds of Crime Act (POCA) 2002, the order will specify the amount to be paid and the due date for payment.

Section 11 of POCA 2002, as originally enacted, envisages the whole amount becoming due by the same date, which will be not later than six months after the date of the order. But there is scope for that date to be postponed, on further application to the court, to a date not later than 12 months after the date of the order.

The Serious Crime Act 2015 will substitute a new section 11 (when the relevant section comes into force), which will expressly permit the amount to be paid in instalments, due by different dates, each of which is to be not later than three months after the date of the order. It is possible for these dates to be postponed to new dates not later than six months after the date of the order.

An application for a further postponement must be made (but not necessarily heard) before the initial period expires.

No further postponement of the due dates is possible beyond the limits set out above.

 

Order under appeal

Lodging an appeal against a confiscation order will not, of itself, prevent interest from accruing on amounts not paid on time. The Court of Appeal may quash or vary a confiscation order which will have a consequential impact on the interest payable.

 

Interest payable

If any amount payable is not paid by the due date then interest is added under section 12 (which is correspondingly amended by section 5 of the Serious Crime Act). Interest is calculated on the amount which is overdue and charged at the rate applicable to civil court judgments under section 17 of the Judgments Act 1838, which is currently 8 per cent per annum. That interest rate is not changed frequently - it was last amended in 1993.

So, for example, where there is an outstanding amount of £150,000, interest of £1,000 per month will be added to that.

But interest is chargeable only for periods after the due date for payment. So, the effect of a postponement is not only to delay any enforcement proceedings and the possible imposition of a default sentence but also to delay the date from which interest starts to run.

 

Effect on default sentence

Interest can have an impact on the default sentence. An illustrative example may make this clear:

John is subject to a confiscation order in the sum of £150,000 with a default sentence of 30 months. He has paid £30,000 under the order, but interest of £15,000 has been added. When John is being committed to prison under the default sentence, the balance outstanding is £135,000 (including the interest) and the default term will be 27 months. This is because £135,000 is 90 per cent of £150,000 and 90 per cent of 30 months is 27 months. (In practice the interest will have been calculated up to the day when the notice of the enforcement hearing was issued and the default sentence would be calculated in days rather than months.)

However, interest will not normally increase the default term beyond the figure originally set by the court.

So, for example, Peter is subject to a confiscation order in the sum of £400,000 with a default sentence of 48 months. He has paid £10,000 under the order, but interest of £34,000 has been added. When Peter is being committed to prison under the default sentence, the balance outstanding is £424,000, but the default term will be unchanged at 48 months.

The prosecution may apply to the Crown Court to have a default sentence increased to reflect added interest - but this is very rare in practice.

David Winch is a forensic accountant specialising in crime and proceeds of crime and a director of Accounting Evidence Ltd