Proceeds of Crime Act 2002 (c. 29)

(The document as of February, 2008)

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Capital Allowances

Plant and machinery

12 (1) If there is a Part 5 transfer of plant or machinery, Part 2 of the Allowances Act 2001 is to have effect as if a transferor who has incurred qualifying expenditure were required to bring the disposal value of the plant or machinery into account in accordance with section 61 of that Act for the chargeable period in which the transfer occurs.

(2) But the Part 5 transfer is not to be treated as a disposal event for the purposes of Part 2 of that Act other than by virtue of sub-paragraph (1).

13 (1) If a compensating payment is made to the transferor, the disposal value to be brought into account is the amount of the payment.

(2) Otherwise, the disposal value to be brought into account is the amount which would give rise neither to a balancing allowance nor to a balancing charge.

14 (1) Paragraph 13(2) does not apply if the qualifying expenditure has been allocated to the main pool or a class pool.

(2) Instead, the disposal value to be brought into account is the notional written-down value of the qualifying expenditure incurred by the transferor on the provision of the plant or machinery.

(3) The notional written-down value is--

QE - A

where--

QE is the qualifying expenditure incurred by the transferor on the provision of the plant or machinery,
A is the total of all allowances which could have been made to the transferor in respect of the expenditure if--
- (a) that expenditure had been the only expenditure that had ever been taken into account in determining his available qualifying expenditure, and
- (b) all allowances had been made in full.

(4) But if--

(a) the Part 5 transfer of the plant or machinery occurs in the same chargeable period as that in which the qualifying expenditure is incurred, and

(b) a first-year allowance is made in respect of an amount of the expenditure,

the disposal value to be brought into account is that which is equal to the balance left after deducting the first year allowance.

15 (1) Paragraph 13 does not apply if--

(a) a qualifying activity is carried on in partnership,

(b) the Part 5 transfer is a transfer of plant or machinery which is partnership property, and

(2) Instead, the disposal value to be brought into account is the sum of--

(a) any compensating payments made to any of the partners, and

(b) in the case of each partner to whom a compensating payment has not been made, his share of the tax-neutral amount.

(3) A partner's share of the tax-neutral amount is to be determined according to the profit-sharing arrangements for the twelve months ending immediately before the date of the Part 5 transfer.

16 (1) Paragraph 13 does not apply if--

(a) a qualifying activity is carried on in partnership,

(b) the Part 5 transfer is a transfer of plant or machinery which is not partnership property but is owned by two or more of the partners ("the owners"),

(d) compensating payments are made to one or more, but not both or all, of the owners.

(2) Instead, the disposal value to be brought into account is the sum of--

(a) any compensating payments made to any of the owners, and

(b) in the case of each owner to whom a compensating payment has not been made, his share of the tax-neutral amount.

(3) An owner's share of the tax-neutral amount is to be determined in proportion to the value of his interest in the plant or machinery.

17 (1) Paragraphs 12 to 16 have effect as if they were included in section 61 of the Allowances Act 2001.

(2) In paragraphs 15 and 16, the tax-neutral amount is the amount that would be brought into account as the disposal value under paragraph 13(2) or (as the case may be) 14 if the provision in question were not disapplied.

Industrial buildings

18 (1) If there is a Part 5 transfer of a relevant interest in an industrial building, Part 3 of the Allowances Act 2001 is to have effect as if the transfer were a balancing event within section 315(1) of that Act.

(2) But the Part 5 transfer is not to be treated as a balancing event for the purposes of Part 3 of that Act other than by virtue of sub-paragraph (1).

19 (1) If a compensating payment is made to the transferor, the proceeds from the balancing event are the amount of the payment.

(2) Otherwise--

(a) the proceeds from the balancing event are the amount which is equal to the residue of qualifying expenditure immediately before the transfer, and

(b) no balancing adjustment is to be made as a result of the event under section 319 of the Allowances Act 2001.

20 (1) Paragraph 19 does not apply to determine the proceeds from the balancing event if--

(a) the relevant interest in the industrial building is partnership property, and

(b) compensating payments are made to one or more, but not both or all, of the partners.

(2) Instead, the proceeds from the balancing event are the sum of--

(a) any compensating payments made to any of the partners, and

(b) in the case of each partner to whom a compensating payment has not been made, his share of the amount which is equal to the residue of qualifying expenditure immediately before the Part 5 transfer.

(3) A partner's share of that amount is to be determined according to the profit-sharing arrangements for the twelve months ending immediately before the date of the Part 5 transfer.

21 Paragraphs 18 to 20 have effect as if they were included in Part 3 of the Allowances Act 2001.

Flat conversion

22 (1) If there is a Part 5 transfer of a relevant interest in a flat, Part 4A of the Allowances Act 2001 is to have effect as if the transfer were a balancing event within section 393N of that Act.

(2) But the Part 5 transfer is not to be treated as a balancing event for the purposes of Part 4A of that Act other than by virtue of sub-paragraph (1).

23 (1) If a compensating payment is made to the transferor, the proceeds from the balancing event are the amount of the payment.

(2) Otherwise, the proceeds from the balancing event are the amount which is equal to the residue of qualifying expenditure immediately before the transfer.

24 (1) Paragraph 23 does not apply to determine the proceeds from the balancing event if--

(a) the relevant interest in the flat is partnership property, and

(b) compensating payments are made to one or more, but not both or all, of the partners.

(2) Instead, the proceeds from the balancing event are the sum of--

(a) any compensating payments made to any of the partners, and

(b) in the case of each partner to whom a compensating payment has not been made, his share of the amount which is equal to the residue of qualifying expenditure immediately before the transfer.

(3) A partner's share of that amount is to be determined according to the profit-sharing arrangements for the twelve months ending immediately before the date of the transfer.

25 Paragraphs 22 to 24 have effect as if they were included in Part 4A of the Allowances Act 2001.

Research and development

26 If there is a Part 5 transfer of an asset representing qualifying expenditure incurred by a person, the disposal value he is required to bring into account under section 443(1) of the Allowances Act 2001 for any chargeable period is to be determined as follows (and not in accordance with subsection (4) of that section).

27 (1) If a compensating payment is made to the transferor, the disposal value he is required to bring into account is the amount of the payment.

(2) Otherwise, the disposal value he is required to bring into account is nil.

28 (1) Paragraph 27 does not apply to determine the disposal value to be brought into account if--

(a) the asset is partnership property, and

(b) compensating payments are made to one or more, but not both or all, of the partners.

(2) Instead, the disposal value to be brought into account is equal to the sum of any compensating payments.

29 Paragraphs 26 to 28 have effect as if they were included in Part 6 of the Allowances Act 2001.

Employee etc. Share Schemes

Share options

30 Section 135(6) of the Taxes Act 1988 (gains by directors and employees) does not make any person chargeable to tax in respect of any gain realised by the trustee for civil recovery.

Conditional acquisition of shares

31 Section 140A(4) of the Taxes Act 1988 (disposal etc. of shares) does not make the transferor chargeable to income tax in respect of a Part 5 transfer of shares or an interest in shares.

Shares acquired at an undervalue

32 Section 162(5) of the Taxes Act 1988 (employee shareholdings) does not make the transferor chargeable to income tax in respect of a Part 5 transfer of shares.

Shares in dependent subsidiaries

33 Section 79 of the Finance Act 1988 (c. 39) (charge on increase in value of shares) does not make the transferor chargeable to income tax in respect of a Part 5 transfer of shares or an interest in shares.

Section 456

SCHEDULE 11 Amendments

Introduction

1 The amendments specified in this Schedule shall have effect.

Parliamentary Commissioner Act 1967 (c. 13)

2 (1) The Parliamentary Commissioner Act 1967 is amended as follows.

(2) In Schedule 2 (Departments etc. subject to investigation) at the appropriate place insert--

" Director of the Assets Recovery Agency. "

(3) In the Notes to that Schedule before paragraph 1 insert--

" A1 In the case of the Director of the Assets Recovery Agency an investigation under this Act may be conducted only in respect of the exercise of functions vested in him by virtue of a notice served on the Commissioners of Inland Revenue under section 317(2), 321(2) or 322(2) of the Proceeds of Crime Act 2002 (Inland Revenue functions). "

Police (Scotland) Act 1967 (c. 77)

3 (1) The Police (Scotland) Act 1967 is amended as follows.

(2) In section 38(3B)(liability of Scottish Ministers for constables on central service) after "central service" insert "or on temporary service as mentioned in section 38A(1)(aa) of this Act".

(3) In section 38A(1) (meaning of "relevant service") after paragraph (a) insert--

" (aa) temporary service with the Scottish Ministers in connection with their functions under Part 5 or 8 of the Proceeds of Crime Act 2002, on which a person is engaged with the consent of the appropriate authority; " .

Criminal Appeal Act 1968 (c. 19)

4 (1) The Criminal Appeal Act 1968 is amended as follows.

(2) In section 33 (appeal to House of Lords) after subsection (1) insert--

" (1A) In subsection (1) above the reference to the prosecutor includes a reference to the Director of the Assets Recovery Agency in a case where (and to the extent that) he is a party to the appeal to the Court of Appeal. "

(3) In section 50(1) (meaning of sentence) after paragraph (c) insert--

" (ca) a confiscation order under Part 2 of the Proceeds of Crime Act 2002;

(cb) an order which varies a confiscation order made under Part 2 of the Proceeds of Crime Act 2002 if the varying order is made under section 21, 22 or 29 of that Act (but not otherwise); " .

Misuse of Drugs Act 1971 (c. 38)

5 (1) Section 27 of the Misuse of Drugs Act 1971 (forfeiture) is amended as follows.

(2) In subsection (1) for "a drug trafficking offence, as defined in section 1(3) of the Drug Trafficking Act 1994" substitute "an offence falling within subsection (3) below".

(3) After subsection (3) insert--

" (4) An offence falls within this subsection if it is an offence which is specified in--

(a) paragraph 1 of Schedule 2 to the Proceeds of Crime Act 2002 (drug trafficking offences), or

(b) so far as it relates to that paragraph, paragraph 10 of that Schedule. "

Immigration Act 1971 (c. 77)

6 In section 28L of the Immigration Act 1971, in paragraph (c) for the words "33 of the Criminal Law (Consolidation) (Scotland) Act 1995" substitute "412 of the Proceeds of Crime Act 2002".

Rehabilitation of Offenders Act 1974 (c. 53)

7 In section 1 of the Rehabilitation of Offenders Act 1974 (rehabilitated persons and spent convictions) after subsection (2A) insert--

" (2B) In subsection (2)(a) above the reference to a fine or other sum adjudged to be paid by or imposed on a conviction does not include a reference to an amount payable under a confiscation order made under Part 2 or 3 of the Proceeds of Crime Act 2002. "

Rehabilitation of Offenders (Northern Ireland) Order 1978 (S.I. 1978/1908 (N.I. 27))

8 In Article 3 of the Rehabilitation of Offenders (Northern Ireland) Order 1978 (rehabilitated persons and spent convictions) after paragraph (2) insert--

" (2A) In paragraph (2)(a) the reference to a fine or other sum adjudged to be paid by or imposed on a conviction does not include a reference to an amount payable under a confiscation order made under Part 4 of the Proceeds of Crime Act 2002. "

Criminal Appeal (Northern Ireland) Act 1980 (c. 47)

9 (1) The Criminal Appeal (Northern Ireland) Act 1980 is amended as follows.

(2) In section 30(3) (meaning of sentence) omit "and" after paragraph (b) and after paragraph (c) insert--

" (d) a confiscation order under Part 4 of the Proceeds of Crime Act 2002;

(e) an order which varies a confiscation order made under Part 4 of the Proceeds of Crime Act 2002 if the varying order is made under section 171, 172 or 179 of that Act (but not otherwise). "

(3) In section 31 (appeal to House of Lords) after subsection (1) insert--

Legal Aid, Advice and Assistance (Northern Ireland) Order 1981 (S.I. 1981/228 (N.I. 8))

10 (1) Part I of Schedule 1 to the Legal Aid, Advice and Assistance (Northern Ireland) Order 1981 (proceedings for which legal aid may be given under Part II of the Order) is amended as follows.

(2) After paragraph 2 insert--

" 2A (1) The following proceedings in the Crown Court under the Proceeds of Crime Act 2002--

(a) proceedings which relate to a direction under section 202(3) or 204(3) as to the distribution of funds in the hands of a receiver;

(b) applications under section 210 relating to action taken or proposed to be taken by a receiver;

(c) applications under section 211 to vary or discharge an order under any of sections 196 to 201 for the appointment of or conferring powers on a receiver;

(d) applications under section 220 or 221 for the payment of compensation;

(e) applications under sections 351(3), 362(3), 369(3) or 375(2) to vary or discharge certain orders made under Part 8.

(2) But sub-paragraph (1) does not apply in relation to a defendant (within the meaning of Part 4 of that Act) in the following proceedings--

(a) proceedings mentioned in head (b) of that sub-paragraph;

(b) an application under section 221 for the payment of compensation if the confiscation order was varied under section 179. "

(3) In paragraph 3 (courts of summary jurisdiction), after sub-paragraph (i) insert--

" (j) proceedings under sections 295, 297, 298, 301 and 302 of the Proceeds of Crime Act 2002 " .

(4) The amendments made by this paragraph are without prejudice to the power to make regulations under Article 10(2) of the Legal Aid, Advice and Assistance (Northern Ireland) Order 1981 amending or revoking the provisions inserted by this paragraph.

Civil Jurisdiction and Judgments Act 1982 (c. 27)

11 In section 18 of the Civil Jurisdiction and Judgments Act 1982 (enforcement of United Kingdom judgments in other parts of the United Kingdom) in subsection (3) (exceptions) insert after paragraph (c)--

" (d) an order made under Part 2, 3 or 4 of the Proceeds of Crime Act 2002 (confiscation). "

Civic Government (Scotland) Act 1982 (c. 45)

12 (1) The Civic Government (Scotland) Act 1982 is amended as follows.

(2) In section 86A(3) (application of Part VIIA) for "sections 21(2) and 28(1) of the Proceeds of Crime (Scotland) Act 1995" substitute "section 21(2) of the Proceeds of Crime (Scotland) Act 1995 and Part 3 of the Proceeds of Crime Act 2002".

(3) In paragraph 8 of Schedule 2A (interpretation) for the definition of "restraint order" substitute--

" "restraint order" means a restraint order made under Part 3 of the Proceeds of Crime Act 2002 " .

Criminal Justice Act 1982 (c. 48)

13 In Part 2 of Schedule 1 to the Criminal Justice Act 1982 (offences excluded from early release provisions) after the entry relating to the Drug Trafficking Act 1994 insert--

" PROCEEDS OF CRIME ACT 2002

Section 327 (concealing criminal property etc).
Section 328 (arrangements relating to criminal property).
Section 329 (acquisition, use and possession of criminal property). "

Police and Criminal Evidence Act 1984 (c. 60)

14 (1) The Police and Criminal Evidence Act 1984 is amended as follows.

(2) In section 56 (right to have someone informed when arrested) for subsection (5A) substitute--

" (5A) An officer may also authorise delay where he has reasonable grounds for believing that--

(a) the person detained for the serious arrestable offence has benefited from his criminal conduct, and

(b) the recovery of the value of the property constituting the benefit will be hindered by telling the named person of the arrest.

(5B) For the purposes of subsection (5A) above the question whether a person has benefited from his criminal conduct is to be decided in accordance with Part 2 of the Proceeds of Crime Act 2002. "

(3) In section 58 (access to legal advice) for subsection (8A) substitute--

" (8A) An officer may also authorise delay where he has reasonable grounds for believing that--

(a) the person detained for the serious arrestable offence has benefited from his criminal conduct, and

(b) the recovery of the value of the property constituting the benefit will be hindered by the exercise of the right conferred by subsection (1) above.

(8B) For the purposes of subsection (8A) above the question whether a person has benefited from his criminal conduct is to be decided in accordance with Part 2 of the Proceeds of Crime Act 2002. "

(4) In section 116 (meaning of serious arrestable offence) in subsection (2) for paragraph (c) and the word "and" immediately preceding it substitute--

" (c) any offence which is specified in paragraph 1 of Schedule 2 to the Proceeds of Crime Act 2002 (drug trafficking offences),

(d) any offence under section 327, 328 or 329 of that Act (certain money laundering offences). "

Bankruptcy (Scotland) Act 1985 (c. 66)

15 (1) The Bankruptcy (Scotland) Act 1985 is amended as follows.

(2) In section 5(4) (meaning of "qualified creditor") for the words from "has the meaning" to "1995" substitute "means a confiscation order under Part 2, 3 or 4 of the Proceeds of Crime Act 2002".

(3) In section 7(1) (meaning of "apparent insolvency") for the words from "has the meaning assigned" where second occurring to "said Act of 1994" where second occurring substitute ""confiscation order" and "restraint order" mean a confiscation order or a restraint order made under Part 2, 3 or 4 of the Proceeds of Crime Act 2002".

(4) After section 31 (vesting of estate at date of sequestration) insert--

" 31A Property subject to restraint order

(1) This section applies where--

(a) property is excluded from the debtor's estate by virtue of section 420(2)(a) of the Proceeds of Crime Act 2002 (property subject to a restraint order),

(b) an order under section 50, 52, 128, 198 or 200 of that Act has not been made in respect of the property, and

(2) On the discharge of the restraint order the property vests in the permanent trustee as part of the debtor's estate.

(3) But subsection (2) does not apply to the proceeds of property realised by a management receiver under section 49(2)(d) or 197(2)(d) of that Act (realisation of property to meet receiver's remuneration and expenses).

31B Property in respect of which receivership or administration order is made

(1) This section applies where--

(a) property is excluded from the debtor's estate by virtue of section 420(2)(b), (c) or (d) of the Proceeds of Crime Act 2002 (property in respect of which an order for the appointment of a receiver or administrator under certain provisions of that Act is in force), and

(b) a confiscation order is made under section 6, 92 or 156 of that Act,

(d) any of the property remains in the hands of the receiver or administrator (as the case may be).

(2) The property vests in the permanent trustee as part of the debtor's estate.

31C Property subject to certain orders where confiscation order discharged or quashed

(1) This section applies where--

(a) property is excluded from the debtor's estate by virtue of section 420(2)(a), (b), (c) or (d) of the Proceeds of Crime Act 2002 (property in respect of which a restraint order or an order for the appointment of a receiver or administrator under that Act is in force),

(b) a confiscation order is made under section 6, 92 or 156 of that Act, and

(c) the confiscation order is discharged under section 30, 114 or 180 of that Act (as the case may be) or quashed under that Act or in pursuance of any enactment relating to appeals against conviction or sentence.

(2) Any property in the hands of a receiver appointed under Part 2 or 4 of that Act or an administrator appointed under Part 3 of that Act vests in the permanent trustee as part of the debtor's estate.

(5) In section 55 (effect of discharge) after subsection (2) insert--

" (3) In subsection (2)(a) above the reference to a fine or other penalty due to the Crown includes a reference to a confiscation order made under Part 2, 3 or 4 of the Proceeds of Crime Act 2002. " .

Insolvency Act 1986 (c. 45)

16 (1) The Insolvency Act 1986 is amended as follows.

(2) In section 281 (effect of discharge) after subsection (4) insert--

" (4A) In subsection (4) the reference to a fine includes a reference to a confiscation order under Part 2, 3 or 4 of the Proceeds of Crime Act 2002. "

(3) After section 306 insert--

" 306A Property subject to restraint order

(1) This section applies where--

(a) property is excluded from the bankrupt's estate by virtue of section 417(2)(a) of the Proceeds of Crime Act 2002 (property subject to a restraint order),

(b) an order under section 50, 52, 128, 198 or 200 of that Act has not been made in respect of the property, and

(2) On the discharge of the restraint order the property vests in the trustee as part of the bankrupt's estate.

306B Property in respect of which receivership or administration order made

(1) This section applies where--

(a) property is excluded from the bankrupt's estate by virtue of section 417(2)(b), (c) or (d) of the Proceeds of Crime Act 2002 (property in respect of which an order for the appointment of a receiver or administrator under certain provisions of that Act is in force),

(b) a confiscation order is made under section 6, 92 or 156 of that Act,

(d) any of the property remains in the hands of the receiver or administrator (as the case may be).

(2) The property vests in the trustee as part of the bankrupt's estate.

306C Property subject to certain orders where confiscation order discharged or quashed

(1) This section applies where--

(a) property is excluded from the bankrupt's estate by virtue of section 417(2)(a), (b), (c) or (d) of the Proceeds of Crime Act 2002 (property in respect of which a restraint order or an order for the appointment of a receiver or administrator under that Act is in force),

(b) a confiscation order is made under section 6, 92 or 156 of that Act, and

(2) Any such property in the hands of a receiver appointed under Part 2 or 4 of that Act or an administrator appointed under Part 3 of that Act vests in the trustee as part of the bankrupt's estate.

Criminal Justice Act 1988 (c. 33)

17 (1) The Criminal Justice Act 1988 is amended as follows.

(2) The following provisions shall cease to have effect--

(a) sections 71 to 102;

(b) Schedule 4.

(3) In section 151(4) (Customs and Excise power of arrest) omit "and" after paragraph (a), and after paragraph (b) insert--

" (c) a money laundering offence; "

(4) In section 151(5) for the words after "means" substitute " any offence which is specified in--

(a) paragraph 1 of Schedule 2 to the Proceeds of Crime Act 2002 (drug trafficking offences), or

(b) so far as it relates to that paragraph, paragraph 10 of that Schedule. "

(5) In section 151 after subsection (5) insert--

" (6) In this section "money laundering offence" means any offence which by virtue of section 415 of the Proceeds of Crime Act 2002 is a money laundering offence for the purposes of Part 8 of that Act. "

(6) In section 152(4) (remands of suspected drugs offenders to customs detention) for the words after "means" substitute " any offence which is specified in--

(a) paragraph 1 of Schedule 5 to the Proceeds of Crime Act 2002 (drug trafficking offences), or

(b) so far as it relates to that paragraph, paragraph 10 of that Schedule. "

Extradition Act 1989 (c. 33)

18 (1) The Extradition Act 1989 is amended as follows.

(2) In section 22 (extension of purposes of extradition for offences under Acts giving effect to international conventions) in subsection (4)(h)--

(a) for sub-paragraph (i) substitute--

" (i) any offence which is specified in--

(a) paragraph 1 of Schedule 2 to the Proceeds of Crime Act 2002 (drug trafficking offences), or

(b) so far as it relates to that paragraph, paragraph 10 of that Schedule;

(ia) any offence which by virtue of section 415 of the Proceeds of Crime Act 2002 is a money laundering offence for the purposes of Part 8 of that Act; " ;

(b) for sub-paragraph (ii) substitute--

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