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If you or a loved one are facing an initial fraudulent trading allegation, know that experiencing an overwhelming mix of emotions and an urgency to start your legal response are natural. Fraudulent trading is a grave offence and promptly appointing an experienced criminal defence solicitor can be pivotal to your case. This article aims to demystify fraudulent trading offences. We outline the basics of the offences, list some examples, explain sentencing for first-timers, and evaluate imprisonment risks. We also outline how to get in touch with our team to arrange top-rated legal assistance.
Fraudulent trading is an offence under the Companies Act 2006. For the most part, it involves carrying on a business with intent to defraud creditors, members, or others.
Section 993 of the Companies Act 2006 sets out the offence of fraudulent trading. Under this provision, a person commits the offence if they carry on the business of the company with intent to defraud creditors of the company or any other person, or for any fraudulent purpose.
To secure a conviction for fraudulent trading, the prosecution must establish that:
Fraudulent trading is a very serious corporate offence. On conviction, the court can impose potentially unlimited fines and disqualify the convicted person from being a director. Due to this being a fraud offence, being found guilty can also lead to imprisonment up to 10 years.
Prosecution typically occurs in the Crown Court due to the severity of the cases. The actual penalties you can expect a court to hand down will depend on factors like the scale of the fraud, losses caused, and the defendant’s level of culpability, as we explore later.
Examples of this offence include:
Some of these activities are likely also to lead to other criminal offences being charged, such as tax evasion or fraud by false representation.
If you are suspected of fraudulent trading in the UK, you are likely to face investigation and potential prosecution under the Companies Act 2006.
Here’s a general outline of what could happen:
Seeking urgent legal advice is vital if you or someone you care about are facing such accusations, as the exact process will depend on your specific situation.
Fraudulent trading is an offence under the Companies Act 2006 that carries a maximum sentence of 10 years’ imprisonment. As mentioned, the offence involves activities like carrying on a business with intent to defraud creditors, shareholders, or others, or for any fraudulent purpose. These are serious harms taken into account when sentencing.
Aggravating factors that may increase the sentence include the scale of the fraud, abusing a position of power, involving others in the fraud, targeting vulnerable victims, trying to cover up the fraud, and previous convictions for dishonesty. Mitigating factors like early guilty pleas, showing remorse, or making amends, on the other hand, may reduce the sentence.
Courts also consider disqualifying fraudulent directors from running companies under the Company Directors Disqualification Act 1986. The Insolvency Service can pursue disqualification for up to 15 years. Serious cases may also prompt the Financial Conduct Authority to take regulatory action. Companies themselves can face compulsory liquidation. Finally, the proceeds of fraudulent trading may be recovered under the Proceeds of Crime Act 2002.
There are several potential defences that can be raised in response to allegations of fraudulent trading:
Additionally, skilled defence lawyers specialising in fraudulent trading will meticulously analyse the strength of the prosecution’s evidence, search for inconsistencies, and identify any weaknesses in the case against you. As with any crime, raising reasonable doubt is crucial.
If you are facing allegations of fraudulent trading, get the advice of a qualified and experienced fraudulent trading solicitor today to ensure that you build your defence on solid foundations.
It is hard to predict whether a first time fraudulent trading conviction will lead to imprisonment, as judges consider many factors. While fraudulent trading is a serious crime, courts do view first offences as mitigating when determining sentences. This may reduce a prison term substantially depending on the circumstances.
However, judges are usually reluctant to fully suspend sentences given the harm to creditors and public confidence in companies. In any sentencing decision, you can expect the prosecution to emphasise the damage caused and the broader need for deterrence.
The nature and scale of the fraud, defences raised, and other mitigating evidence presented are the most critical factors in deciding whether a first-time offender goes to prison for fraudulent trading. Anyone facing prosecution should, therefore, obtain advice from an experienced fraud lawyer on likely sentencing for comparable cases to see whether imprisonment can be avoided.
Facing charges or indeed prosecution for fraudulent trading can be deeply concerning, for you, your loved ones, and your work colleagues. Expert legal advice from the earliest stages is crucial to understand your best options. Note that for those with no prior convictions, we can sometimes even prevent charges or achieve acquittals before trial. Contact the team at Stuart Miller Solicitors today for free, friendly advice.
A legal expert will consult you within 24 hours of making an enquiry.
We will always treat you with trust, understanding and respect.
Your case will be handled by an expert who specialises in your type of offence.
We will take early action to end proceedings as soon as it is practically and legally possible to do so.
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