Section 22 Applications and Your Pension. The POCA team was recently instructed in a case where the defendant, who had a Confiscation Order in 2010, was identified as having further assets available to him, including three pension funds. We were able to successfully negotiate a deferred payment for our client to maximise the money paid towards the Order and avoid paying penalty fees for realising the pension prematurely.
It is not uncommon for pensions to be included within Section 22 Applications. The question as to whether it is ‘just’ within the Proceeds of Crime is not straightforward and will depend on the individual circumstances. It is certainly a tough prospect for a defendant to face losing their nest egg that they were anticipating relying on in the future, especially when the money was saved from an early career, sometimes decades before any offending took place. This can be a particularly harsh reality when a conviction against a defendant’s name has the potential to limit future employment prospects.
The defendant, in this case, was also self-employed meaning that job security and retirement, particularly during Covid, was going to be very challenging without these funds.
The law in relation to S22 Applications
Case law shows us that there are many factors to be taken into account when considering Section 22 Applications to determine what is ‘just’, such as how long ago the Order was made; the amount outstanding; and the impact on the defendant (Padda). However, there has been no successful challenge in the Court of Appeal as to pensions specifically.
Pensions are also subject to strict tax rules. Save for exceptional circumstances, any withdrawal from your pension before turning 55 is classed as an ‘unauthorised payment’. While technically the pension can still be withdrawn – it will be subject to an eye-watering 55% tax which goes to HMRC as a penalty. For example, a pension worth £100,000 in total would see £55,000 being paid to HMRC and only £45,000 being paid towards the Confiscation Order.
In this case, the defendant had not yet turned 55. Nonetheless, the pensions were pursued by the Prosecution as an available asset as the money could be withdrawn, even though the defendant would have to pay a significant tax penalty for doing so.
How we helped
We were able to successfully propose a Variation to the Restraint Order allowing the funds to remain in his pension accounts until age 55. This had the effect of preserving the full amount of money to be later contributed towards the Order with no tax payable. Rather than the tax going to HMRC, the full amount was used to pay the Confiscation Order reducing the amount owing in future.
The Section 22 Application was withdrawn, and all other assets were removed from the proceedings. A Variation to the Restraint Order was drafted and sealed by the Judge.
We can assist our clients in reaching a practical, common-sense resolution to any POCA issue to ensure that their interests are protected. If you need assistance with a Proceeds of Crime matter, contact us today.
We can help you with your Section 22 Application and your pension
We will deal with confiscation cases anywhere in England and Wales.
For the help and assistance you need to get in touch with us today:
- Call: 0113 244 0597
- Email: poca@cohencramer.co.uk
- Request a call back by entering your details into the form at the bottom of this page