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Good afternoon sir. I’d like to know if Fraudulent trading is only a civil offence or both a civil and criminal offence. I’m using the latest BPP kit, and when I look at the explanation for question number 25.7 of part H(Corporate fraudulent and criminal behaviour), it says Fraudulent trading is not a criminal offence, however, the explanation for question number 25.14 says that it is both a civil and criminal offence. It would be great if you could help me with this confusion. Hope you have a nice day.
I don’t know the questions to which you have referred and I don’t have access to them. However …
Under the Insolvency Act 1986, fraudulent trading is a civil offence, making those knowingly involved personally liable for the company’s debts and liabilities.
But, further, under the Companies Act 2006, fraudulent trading applies when a company carries on business with the intent to defraud creditors, this makes fraudulent trading a criminal offence as well.
So … I suppose that the appropriate answer depends on the precise wording of the question! For example, if the question were to read something like ‘What category of offence is committed where people are personally knowingly involved in fraudulent trading of an insolvent company?’ then the answer would be ‘Civil’
But an alternative question might be ‘When a company carries on business with the intent to defraud creditors, what category of offence is committed?’ then the answer would be ‘Both Civil and Criminal’
Is that OK?
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