Frozen Assets, Rising Liability: the Impact of Inflation on Confiscation Orders

A restraint order can freeze a defendant’s assets for years. It does not, however, freeze the value of the criminal benefit that may ultimately be subject to confiscation. That distinction lies at the heart of the Court of Appeal’s decision in R v Ibori [2026] EWCA Crim 1396, handed down on 3 November 2026.

The court held that an inflation adjustment is not disproportionate simply because assets under restraint have failed to keep pace with inflation. The practical consequence is important: in long-running confiscation proceedings, the amount attributed to the criminal benefit may increase even while the defendant is unable to access the restrained assets.

The legal framework: the change in value of money adjustment

The issue concerned the change in value of money (CVM) adjustment. Under section 80 of the Proceeds of Crime Act 2002 (POCA), the original value is adjusted to reflect inflation and compared with the current value of the property, or its replacement. In general, the higher figure is used. The Criminal Justice Act 1988 contains equivalent provisions.

The appeals raised a single question: should the adjustment still apply where bank accounts or property have been restrained and have not generated returns sufficient to match inflation? The Court of Appeal’s answer was yes. Confiscation is concerned with the value of the benefit obtained from crime, not merely the value of the assets left when the confiscation order is made.

What was argued in the appeal?

The appeals arose from separate confiscation proceedings.

• James Ibori pleaded guilty to conspiracy to defraud and money laundering and was sentenced in 2012. His assets had been restrained since 2008. He challenged the inflation adjustment included in a confiscation order of just over £101 million, made under the Criminal Justice Act 1988, and sought a reduction of some £4.3 million.
• Arif Patel was convicted of carousel VAT fraud and money laundering. His commercial property portfolio had been restrained in 2010. He absconded to Dubai in 2011 and was tried in his absence. In August 2025, he was ordered to pay just over £90 million, after the original benefit figure of just under £53 million was adjusted for inflation. His appeal concerned assets held under restraint and managed by a court-appointed receiver.

Both appellants argued that it was disproportionate to make them bear an inflation shortfall when the restraint orders had prevented them from using their assets. They relied on R v Waya [2012] UKSC 51 and the right to property under Article 1 of Protocol 1 to the European Convention on Human Rights. They invited the court, under section 3 of the Human Rights Act 1998, to interpret the confiscation provisions so as to disapply the uplift.

Mr Patel advanced an additional argument. He said that he had not enjoyed the benefit of his property portfolio since 2010 and that taking account of rental income which had itself increased with inflation, while also applying the CVM uplift, resulted in double recovery. He also pointed to the reduction in the receivership estate caused by receivership costs.

Why did the Court of Appeal dismiss the appeals?

The Court of Appeal dismissed both appeals. Applying Waya, it considered whether the orders were proportionate to the legitimate aim of the confiscation regime. It concluded that the CVM adjustment preserves the real value of the original criminal benefit. It is not interest that the defendant ought to have earned, nor is it an additional penalty.

The fact that the defendants had lost control of their restrained assets did not alter the analysis. Drawing on previous authorities, the court emphasised that confiscation focuses on the value of the benefit when it was obtained. What happens to that benefit afterwards - whether it is retained, spent or loses value - is generally immaterial. The risk that an asset will fail to keep pace with inflation “is the result of a choice by the criminal” (paras 38 and 40).

The court distinguished restraint from repayment. A restraint order freezes assets; it does not itself return money or property to a victim. Nor does restraint, without more, amount to double recovery. Repayment to a victim, or the recovery of the same benefit twice, may raise questions of proportionality. Poor investment performance alone does not. Financial hardship, without more, is also insufficient to make a confiscation order disproportionate.

Why did delay and available assets matter?

In Mr Ibori’s case, the court took account of the delay attributable to his persistent resistance to the confiscation proceedings. The restraint of his assets arose in the context of his criminal conduct. The fact that he might have to meet the uplift from other assets did not make the order disproportionate. He had not discharged the burden of showing that he lacked sufficient available assets. A value-based confiscation order may be satisfied from available assets, whether criminal or legitimate, even if the original proceeds are no longer held by the defendant.

Mr Patel’s further arguments also failed. The court found no double recovery. The shortfall in the receivership estate was attributable to property-market movements and properly incurred costs. It also considered that the scale of the uplift reflected delays in the trial and confiscation proceedings for which Mr Patel was responsible. His lack of control over the restrained assets did not change the outcome.

Practical implications for defendants facing confiscation

The fact that restrained assets have not preserved their real value will not prevent the court from requiring payment of the inflation-adjusted amount. The Court of Appeal has confirmed (again) the draconian nature of POCA and made clear that a defendant who wants to mitigate the increase accruing from the CVM adjustment can do so by “coming clean” (para 53).

What the judgment means is that, save perhaps in the most novel of circumstances, defence arguments challenging the proportionality of the uplift will fail. The defence should still, however,  examine the accuracy of the underlying prosecution calculations with regard to the CVM but otherwise focus resources on other areas of challenging the benefit figure.

David Bloom is ranked for POCA Work and Asset Forfeiture in the Chambers and Partners 2026 guide and is head of SMW’s Financial Crime department