KTS Legal Wins Court Order against HMRC to Recover Large Sum Seized at UK Border
On 5th June 2024, a notable legal victory was achieved by a team of lawyers at KTS Legal, led by Mr Tekcan Tek. A Court order permitted the recovery of a substantial sum of cash for KTS Legal’s client (Respondent). The cash had been seized under the Proceeds of Crime Act 2002 (POCA) at a UK border on 31st May 2023. This outcome marked the end of a year-long litigation between KTS Legal and HM Revenue and Customs (HMRC) over the legitimacy of the Respondent’s seized funds.
Just hours before the hearing on 5th June 2024, three of the four witnesses in support of the Respondent unexpectedly withdrew from testifying. This sudden development severely disrupted the lawyers’ year-long preparations for the trial. Nevertheless, they collaborated closely with Counsel James Fletcher, leveraging his extensive experience and expertise in the field of POCA, to effectively present the case before the judge.
Background to the Case
Based in Mersin, Turkey, the Respondent runs a reputable transportation and freight business, specialising in the movement of goods between Iraq and the UK. Despite its established standing, HMRC cast doubts on the legitimacy of the cash seized at the UK border, swiftly commencing forfeiture proceedings on 31 May 2023.
Under POCA, cash amounts exceeding £1,000 can be seized if there are reasonable grounds to believe that the money is recoverable property or intended for use in unlawful activities. Once HMRC initiated forfeiture proceedings, the Respondent was tasked with disproving the unlawfulness of the cash, while HMRC had the burden of proving its illegitimacy.
The forfeiture application targeted the cash in rem, and lawyers for the Respondent prepared for the case under civil proceedings.
Legal Battle and Court Proceedings
According to POCA, the burden of proof rests with the applicant (in this instance, HMRC) to show, on the balance of probabilities, that the cash is either;
- Recoverable property, meaning it was originally obtained through unlawful conduct; or Intended for use in unlawful conduct.
At trial, HMRC was unable to substantiate either of these claims. Throughout the proceedings, KTS Legal and the Respondent were committed to proving the legitimacy of the seized cash. HMRC’s investigations did not confirm an illegitimate origin for the seized cash to justify its forfeiture.
Challenges at Court
In such cases, Courts retain the authority to draw conclusions based on all surrounding circumstances and inherent suspicions, particularly in an era dominated by electronic banking.
However, while acknowledging that holding large sums of cash could arouse suspicion, the Court ruled that the cash in question was not inherently unlawful. It concluded that HMRC could not be granted forfeiture of cash of a lawful business without concrete evidence of wrongdoing.
It was concluded that a substantial body of evidence supported the legitimate origin of the cash. It further determined that HMRC lacked adequate evidence to establish, on the balance of probability, any unlawful conduct (not even to justify forfeiture of only part of the cash). As a result, the Court directed the return of the cash in full to the Respondent and further ordered HMRC to cover the Respondent’s legal costs.
Conclusion
The Court, despite the lack of witness testimony, was convinced that the cash originated from the Respondent’s lawful operations, and HMRC failed to prove otherwise.
This case emphasises the crucial role of the burden of proof in forfeiture proceedings under POCA. HMRC’s dependence on the sheer amount of cash and the presumption of inherent suspicion fell short of meeting the legal standards for forfeiture. Ultimately, the Respondent’s ability to validate the authenticity of the seized cash and demonstrate the lawful nature of its business activities enabled the lawyers to secure this well-deserved victory.
How can KTS Legal help?
We have a team of experienced lawyers specialising in Proceeds of Crime Act 2002 and asset forfeiture and have successfully acted for respondents both in UK and Abroad.
There is an increased frequency of these forfeitures by government authorities and with our professional advice and assistance as well as meticulous preparation for a trail, we have been able to maintain a 100% success rate acting for our clients.
If you are a business or an individual impacted by any of the above, you can reach out to us on the telephone at +44 20 8367 0505 or email us at info@ktslegal.com if you require advice and assistance.
Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and reliability of the information presented, KTS Legal and its representatives make no warranties or guarantees about the completeness, accuracy, or suitability of this information for any purpose. Legal cases can vary widely based on individual circumstances, and readers are encouraged to seek professional legal counsel for advice tailored to their specific legal situation. KTS Legal and its representatives disclaim all liability for actions taken or not taken based on the contents of this article.
