Jonathan Lennon KC: Another AFO Discharged
HMRC v X, Bristol Magistrates' Court (suspected Daigou activity)
On 10th February 2026 HMRC secured an Account Freezing Order under Part 5 of the Proceeds of Crime Act 2002, against X. The sum frozen was in excess of £400,000, held in Japanese Yen. The order was for a 4 month period. X was a Chinese national who was living in the UK and was the sole director of a start-up company being developed in the field of electronic services. X also held multiple other bank accounts.
HMRC relied on apparent breaches of Chinese currency export controls, given that the frozen account had been funded in part by large credits from counterparties based in China. HMRC also relied on the fact that, despite his only having just left university, X had purchased a flat in London for over £500,000. HMRC suspected that X was guilty of money laundering and Chinese ‘underground banking’ - i.e. Daigou.
Shortly before the 4 month deadline, HMRC sought an extension to the AFO. X instructed Nafisa Julia Fadzelmulla Moreno, Pav Benning and Jia Guo at the Queensbury Group to represent him and Jonathan was promptly instructed to advise and represent X. Advice was given by Jonathan on the presentation of evidence and the legal requirements for successful resistance to the extension application.
Nafisa and the team engaged with HMRC and prepared X’s evidence bundle, in order to put X in the best possible position to challenge HMRC’s application.
In correspondence it was pointed out to HMRC that they had not considered proving the concept of ‘dual criminality’ under Part 5 of POCA – i.e. the necessity of proving that any offence said to have been committed overseas was also an offence if committed here in the UK. This is a requirement of any account forfeiture application where the offending is said to have occurred overseas. Furthermore, there were challenges to the factual allegations raised in the AFO and the extension applications. Costs were threatened if HMRC continued to seek to extend the AFO - the general rule on costs in the police’s favour (the Perinpanathan case) was said to be distinguished on the facts.
On 14/5/26 – 3 months after HMRC obtained the AFO – HMRC notified X that they would no longer be pursuing the extension application and that the AFO was to be discharged.
This was a great result which required expertise, the efficient marshalling of evidence and adept tactical strategising, in order to produce a speedy result for the client.
