Section 23 POCA Applications: Certificates of Inadequacy Explained

The confiscation regime under the Proceeds of Crime Act 2002 (POCA) requires a defendant to pay a determined sum pursuant to a confiscation order, based on their scheduled realisable or available assets.

However, circumstances may arise after the Crown Court has made a confiscation order where payment in full is not possible and section 23 is the statutory provision which allows a defendant to seek a downward adjustment in the amount owed.

What is a Section 23 Certificate of Inadequacy?

Section 23 of POCA allows a defendant to apply to the Crown Court for a certificate stating that the available amount is inadequate to satisfy the order in full, generally where there has been a material change in circumstances since the order was made.

A Section 23 certificate is a formal finding by the Crown Court that the “available amount” is now insufficient to meet the confiscation order. If the court grants a certificate, the amount payable under the confiscation order may be reduced to nil to reflect the defendant’s actual available assets at the time of the application. The focus is on post-confiscation order events, not the position when the order was first imposed.

In practical terms, the application asks the court to recognise that the defendant no longer has sufficient realisable assets to pay the confiscation order in full. An application can only be made once all scheduled assets have been realised.

When might Section 23 apply?

Section 23 applications are fact sensitive. They turn on clear evidence that the assets relied on for the order are no longer available or have reduced in value. Common scenarios of where assets have dropped significantly in value since the order due to market forces include:

• Where a house sells for less than the anticipated scheduled value due to a downturn in the property market and so less equity is available than was anticipated at the time the confiscation order was made.
• Seized assets which realise substantially lower sums at police auctions.
• Crypto assets which have not been converted into a stable currency and are subject to market volatility.

Any application under section 23 must be supported by evidence as well as an explanation as to why the value was not realised at the determined amount. Genuine attempts must have been made, as the fact that the defendant has faced difficulties in realising the asset will be deemed irrelevant by the court. A section 23 application is not a means of appealing against a confiscation order.

Will the prosecution challenge the application?

Possibly, the prosecution will certainly anxiously consider the evidence provided by the defendant in a signed statement and wish to make its own enquiries.

Why does advice and preparation matter?

Section 23 applications succeed or fail on evidence, with supporting material being a decisive factor. The narrative must be consistent, supported, and candid about what has changed and why. Section 23 applications are often complex and highly fact-sensitive, and timing and preparation are crucial.

Comprehensive supporting material and clear and cogent explanations must be provided to show that all efforts were exhausted to realise the asset at the best possible value.

Once a section 23 application has been carefully prepared, the prosecution should be canvassed before the application is filed with the Crown Court that made the original order, to find out if the application will be opposed. Early engagement with the prosecution can help avoid unnecessary disputes and assist the court in focusing on the substantive issues relevant to any proposed adjustment of the order. The prosecution should be invited to consider the explanations and supporting evidence as to why the asset could not be realised at the value attributed to it in the original order, and to confirm the defendant’s current financial position.

If you are struggling to pay a confiscation order or believe your circumstances have materially changed due to a post-confiscation event, seek advice promptly.

If you require advice regarding confiscation orders, please contact Elif Bilecan or David Bloom of this office.