Understanding Tainted Gifts in Confiscation Proceedings
When someone is convicted of a crime, the authorities can seek to recover the financial benefits of that crime under the Proceeds of Crime Act 2002 (POCA). One way they do this is by looking at any tainted gifts the person may have given away. But what does this mean, and how can it impact both the giver and the recipient?
What Are Tainted Gifts?
A tainted gift is when someone transfers property, money, or assets to another person without receiving full market value in return. The law treats these gifts as if they are still in the hands of the convicted person, meaning they can be included in confiscation orders.
A gift is considered tainted if:
It was given after the relevant day, which is usually when the criminal investigation started.
It involves property that was gained through criminal activity, even if the gift was made before the investigation.
The defendant does not have a criminal lifestyle, but the gift was made after the offence was committed.
In short, if a person convicted of a crime has given away assets that could have been used to pay a confiscation order, the court can still count those assets as if they never left the defendant’s control.
How Are Tainted Gifts Valued?
To stop people from giving away valuable assets to avoid confiscation, POCA uses a simple rule: whichever value is higher is the one the court will use. The two options are:
The value of the asset at the time it was gifted, adjusted for inflation.
The value of the asset at the time of the confiscation proceedings.
For example:
If someone gifted a house worth £100,000 ten years ago and today it is worth £200,000, the court will use the higher value (£200,000).
If the house had dropped in value to £80,000, the court would use the adjusted original value to reflect inflation.
This prevents people from avoiding confiscation by transferring valuable assets before being convicted.
Who Can Be Affected by Tainted Gifts?
Tainted gifts can impact both the person convicted of a crime and the recipient of the gift. If someone unknowingly receives a tainted gift, they could be required to return it or face enforcement action.
The recipient is not automatically guilty of a crime, but they may have to prove that they had no reason to suspect the asset came from criminal activity. If they have already sold the asset, they may need to account for its value in other ways.
Defences Against Tainted Gift Allegations
If a person or recipient wants to challenge a tainted gift classification, they may be able to argue:
They paid full market value – If the recipient bought the asset rather than receiving it as a gift, then it does not count as a tainted gift.
The gift was made before any criminal conduct – If the asset was transferred before the defendant was involved in crime, it may not be included in confiscation proceedings.
The recipient had no knowledge of wrongdoing – While this may not prevent the asset from being recovered, it could influence enforcement actions.
Conclusion
Tainted gifts are a key tool in POCA proceedings, allowing authorities to prevent criminals from hiding their wealth by giving assets away. Whether you are a defendant or a recipient of a gift from someone facing confiscation proceedings, it is important to understand how these rules work.
Since confiscation orders can be significant, careful legal and financial analysis is often needed to determine whether an asset qualifies as a tainted gift and how its value should be calculated. Courts will continue to scrutinise such transactions to prevent individuals from evading the consequences of criminal conduct.
