Fraudulent Trading

Fraudulent trading describes two offences of carrying on a business: a) with the intent to defraud creditors; and b) for any fraudulent purpose.

This is an offence commonly committed where a business continues to incur debts despite the directors knowing that the company is insolvent and has no reasonable prospect of being able to pay its debts although it also covers businesses that are fraudulent from the start, e.g. companies that are created with the intention of attracting outside investment that the directors simply intend to steal. Where this type of fraudulent trading is charged, the prosecution must identify creditors who have been defrauded.

The offence can also be committed by companies that “rip off” customers. For example, a business created to trade online that has no intention of sending products to customers. Where this type of fraudulent trading is alleged, the prosecution does not need to identify any creditors of the company, i.e. any customers.

The maximum sentence is a prison sentence of ten-years.