You can probably sell a car which is locked up in a police pound but the sale has to be a genuine one.
Firstly the new owner will have to insure the car. Quotes can be compared here. Before buying the policy this new owner must phone the insurance company to complete the sale (the phone number is provided on the price comparison site) and tell them that the car is currently in a police pound. This may make no difference to the premium since the new owner has (presumably) committed no offence but it is a necessary step and shouldn't take very long. The process is:
You (the original owner) would then have to attend a police station in the authority that it was seized in, or the pound (the seizure notice you will have been given will explain this), with the new owner, along with the Form 3708 (the seizure notice you will have been given), and proof of your own identity. This would normally include your driving licence or passport and one or two utility bills.
The new owner would have to have a bill of sale from you; you can download one from this website; as well as a current driving licence and the insurance certificate. This will be downloadable and the insurer will provide a link to it by email: the police will probably want to see this emailed link to the policy to be sure that it is genuine.
You must also take along the V5C registration document. You can fill in the sale details on the spot if you are unsure of how to do it.
It is then a legal requirement that the new ownership be registered with the DVLA. The police will probably send the forms on to them.
Which is the cheapest impounded car insurance?
How do I get my car out of a police pound?
What happens when a car is impounded?
Why are cars impounded?
What is impounded car insurance?
What will it cost to get my car released?
Who can reclaim my car, if I can't?
Must I inform my HP company?