The number of bank accounts hit by HMRC Account Freezing Orders and Forfeiture Orders has dramatically increased in the last three years, prompting concern over how many individuals and businesses are being wrongly targeted.
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The number of Account Freezing Orders (AFOs) has risen by over 170 per cent from 125 in the 2021/22 financial year to 341 in 2023/24, according to data released following a Freedom of Information request by international law firm RPC. The value of assets frozen by AFOs has increased from £43 million in 2021/22 to £57 million in 2023/24.
The number of Forfeiture Orders (FOs) has also increased over the same period, rising from 92 in 2021/22 to 144 in 2023/24.
Introduced under the Criminal Finances Act 2017, AFOs allow a court to order bank accounts to be frozen for up to two years while law enforcement agencies investigate the source of funds and prevent disposal.
AFOs are granted by the Magistrates Court, and do not require authorisation by a senior judge, or a lawyer. The evidentiary threshold is low. Rather than proving criminality to the usual standard of beyond reasonable doubt, the relevant law enforcement agency only needs to prove its case on a balance of probabilities.
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AFOs can apply to accounts with balances over £1,000 and enable authorities to preserve funds for subsequent forfeiture.
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Not all AFOs will result in a forfeiture, which occurs only when the court is satisfied that the moneys seized are the proceeds of crime or used to facilitate a crime. In the 2023/24 financial year, £14.5m of assets were returned, relating to 75 AFOs.
The low evidential threshold for obtaining an AFO means that this rise in their use is potentially concerning, explains Adam Craggs, partner and head of tax disputes at RPC.
‘Since their introduction, we have seen HMRC invoking these powers on an increasingly regular basis, even though we know that in many cases they do not lead to a subsequent successful forfeiture of assets or criminal prosecution,’ he notes. ‘While money can be returned, this is of little consolation for the individuals and businesses that see their operations unduly impacted as a consequence of their funds being frozen.’
