The High Court granted a Property Freezing Order without notice over about £1.4 million in assets linked to alleged underground banking. The order covered three properties and a savings account. The judgment in HMRC v Cheng Xing and Yan Zhang confirms how quickly relief can be obtained where there is a real risk of dissipation, and it underlines the strict duty of full and frank disclosure on applicants. Although Property Freezing Order’s (or PFO’s) sit within the Proceeds of Crime Act 2002 framework rather than the Civil Procedure Rules, the practical lessons map across to civil freezing injunctions under the updated Part 25 regime.
What happened in HMRC v Xing and why was the order made without notice?
HMRC applied for a Property Freezing Order to restrain dealings with three mortgage free properties and a bank account. The freezing order application was made without notice because HMRC expected that a forthcoming VAT assessment would tip off the respondents and trigger dissipation. On the evidence the court was satisfied there was a good arguable case that the assets were recoverable property obtained through unlawful conduct and that relief without notice was necessary to preserve value pending further hearings.
How do PFOs work under POCA and how do they differ from civil freezing injunctions?
A Property Freezing Order is a civil recovery tool under section 245A POCA 2002. It preserves specific property suspected to be recoverable. The court may proceed without notice where giving notice would prejudice the making of a recovery order because of dissipation risk. Authorities such as NCA v Simkus and Nuttall & Anor v NCA emphasise the need for concrete evidence of risk and the importance of a proportionate order.
A civil freezing injunction under CPR Part 25 supports a private claim and can restrain classes of assets, including worldwide assets. The tests are familiar. You need a good arguable case, a real risk of dissipation, and a just and convenient order that is workable and proportionate. In the civil route the applicant must also give a cross undertaking in damages, with fortification in appropriate cases.
What does Xing tell us about evidence, disclosure and candour on without notice applications?
The duty of full and frank disclosure is strict.
- You must present a balanced picture, including adverse facts, gaps in your case, and any alternative explanations.
- You should explain the practical impacts on respondents and third parties, such as banks. In Xing, the papers explained why notice would undermine the purpose of the application given the statutory VAT timetable.
The evidential narrative tied specific cash flows and third party transfers to the acquisition and holding of unencumbered properties. The court needs traceability, not suspicion. These presentation points apply equally to CPR Part 25 civil freezing applications.
If you are served with a freezing order, what should you do first?
It is essential you react quickly.
- You must comply immediately. Breach risks contempt.
- Read the order in full and follow the disclosure and access requirements to the letter.
- Prepare a complete, accurate asset statement on time.
- If a provision is unclear or impractical, keep a note and seek directions. Use the freezing order return date to narrow the order to what is necessary, to clarify definitions and geographic scope, and to agree fair carve outs for ordinary living or business expenses. The modernised model orders and the April 2025 practice changes make proportionality easier to press at this stage.
Where third party banks or custodians are involved they should acknowledge receipt, freeze only what the order covers and seek clarification where needed. In civil cases third parties can rely on the claimant’s cross undertaking in damages if they suffer loss through compliance that later proves unnecessary.
Our guide on how to respond to a Freezing Order is essential reading for anyone caught up in these types of proceedings
What should claimants and advisers change in light of Xing and the April 2025 reforms?
Matters to now consider include
- Build the case around clear, evidenced dissipation risk. Judges expect specificity on timing and patterns, not general suspicion.
- Adopt the relevant model order and justify any changes from the template in your draft and skeleton.
- Prepare for the return date before you go in without notice.
- Offer directions that let the respondent prepare while preserving assets.
- Take undertakings seriously. In civil cases be ready to fortify your cross undertaking where the potential loss or third party exposure warrants it.
Where allegations touch on informal value transfer or underground banking, make the tracing story readable. Use short paragraphs and a neutral chronology. Explain the source of funds in plain English. That will help the court see why relief is needed and why it is proportionate.
Read more about the risk of dissipation and hiding of assets in our free guide.
Does Xing change anything for account freezing and related orders?
The case sits alongside the growing use of account freezing orders and other preservation tools. It reinforces the need for swift, targeted applications based on balanced evidence and strict candour. It also shows that where there is a clear disparity between income and assets and transfer patterns consistent with evasion of controls, the court will act to preserve property. For companies and directors that means immediate specialist advice on receipt of any order and careful planning for the return date.
FWJ has significant experience of Account Freezing Orders and can assist you with these if required.
FWJ’s practical view
These are powerful orders. Used well they protect value while a claim is tested. Used poorly they can cause avoidable business harm. Our team prepares and defends urgent interim applications every week. We draft to the models, front load the evidence on risk and proportionality, and move quickly to narrow overbroad orders for respondents and third parties. We also advise on related tools such as Norwich Pharmacal orders where information from an innocent intermediary is needed, and validation orders where a winding up petition has led to a bank freeze.
If you have been served with a freezing order, or you need urgent relief to preserve assets, contact us today.
