Rosenblatt were instructed on behalf of the respondent at the Magistrates’ Court. On 20 April 2021 the Appeal Court upheld an earlier Court’s decision to dismiss HM Revenue & Customs’ (HMRC) application for an extension of cash detention beyond the expiration of the first 6 months. The Court held that as the application was heard after the expiration of the initial 6 month’s detention an extension could not be granted despite the delay being caused by the COVID-19 pandemic.
HMRC Investigations | Rosenblatt’s Financial Crime Team
The Proceeds of Crime Act 2002 entitles investigators to seize cash where the amount is in excess of £1,000 and, they believe that such cash represents the proceeds of crime; or that it is intended for use by any person in the pursuit of unlawful conduct.
The seized cash may be retained for an initial 48-hour period within which time an application must be made by the prosecuting authority to the Magistrates’ Court for the continued detention for a further 6-months. Thereafter, further extensions to the earlier Court Order can be made for a period of up to 2 years from the date the initial order was obtained.
In March 2020 we saw the outbreak of the COVID-19 pandemic which forced the UK into a national lockdown. As a result, thousands of Court listings and hearings were postponed.
In this case, HMRC v Mann, HMRC filed their application for an extension of the original order on 26 March 2020. Between 26 March and 2 April 2020, HMRC made numerous requests to arrange for their application for the further detention of cash to be listed prior to the expiration of the 6-month period, (being 3 April 2020) but the Court failed to do so.
HMRC’s application was then listed for a remote telephone hearing on 28 April 2020 which was adjourned and relisted for 22 June 2020. We represented Mr Mann when the District Judge handed down Judgment on 1 July 2020 which was subsequently upheld by the Appeal Court on 20 April 2021. The latter Court highlighted that, in “section 298(2), parliament provided that where an application for forfeiture had been made to a Magistrates Court, the cash is to be detained until Court Proceedings are concluded. When the forfeiture by notice procedure was introduced by the 2009 Act, a similar provision was made in section 297D(5). But neither in 2002 nor in 2009, did Parliament make any amendment to section 295 to ensure that when an application is made for an Order under section 295(2), extending the period for which cash may be detained, the same kind of holding provision should apply. Parliament must, in my view therefore, be taken to have been content with the strict approach which this Court has taken in the case of Henry & Walsh to statutory powers which, though not identically worded, are not materially different”.
This decision effectively means that HMRC, or any other prosecuting authority, must not only lodge their applications for continued detention and seizure of cash within the 6-months’ time period, but such applications must also be heard within this period. If the application is not heard within the 6-months’, the Courts have no power to extend the detention any further.
The Appeal Court concluded, “I have a good deal of sympathy with HMRC on the facts of the present case. Their application was lodged with the court, as I have pointed out, just as the first national lockdown was beginning. They had no reason to believe that a hearing would be so difficult to arrange. If an extension were a matter of discretion, it might well have been exercised in their favour, but, like District Judge Green, I conclude that this is not a matter of discretion at all. I would therefore dismiss this appeal.”
This decision will have significant implications for all future cash seizure proceedings.
Rosenblatt can help
Rosenblatt has a wealth of experience in cash seizure proceedings having been instructed in relation to multi-million pound, multi-jurisdictional investigations and prosecutions brought by HM Revenue and Customs.
https://www.rosenblatt-law.co.uk/services/financial-crime/#financial-crime
