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Hi Mike
In the BPP revision guide the statement is printed:-
“Fraudulent trading under the Insolvency Act 1986 is a civil – not a criminal offence. Any directors found guilty are liable to make good the company’s debts.”
The same question implies that a director found guilty of such an offence would not be liable for an unlimited fine or a prison sentence (which would make sense as these would be criminal penalities right?).
However, everything I see elsewhere refers to fraudulent trading as a criminal offence with Wrongful trading being the civil offence. This was also my own understanding before approaching this question. Can you clarify?
Fraudulent trading is the name ascribed to BOTH a civil offence AND a criminal offence
Under the Insolvency Act 1986, fraudulent trading is a civil offence rendering those that were knowingly parties to those activities personally liable for the debts and liabilities of the company
Under the Companies Act 2006, fraudulent trading also applies where it appears that a company has carried on business with the intent to defraud creditors (whether or not the company is being (or has been) wound up. The penalty here is a fine or imprisonment up to 10 years
OK?
Thank you. I didn’t realise the same offence was in both acts but now it all makes sense!
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