The offence
Section 993 of the Companies Act 2006 makes it an offence for a person knowingly to be a party to the carrying on of a business with intent to defraud creditors, or for any other fraudulent purpose. The offence is triable either-way and carries up to 10 years’ imprisonment on indictment.
Defences
- No intent to defraud creditors or any fraudulent purpose
- Genuine commercial decision-making in difficult trading circumstances
- Disputed knowledge or involvement as a party to the business
- Insolvency and accounting matters properly handled
Sentencing
Fraudulent trading carries up to 10 years on indictment. It is often investigated alongside insolvency and disqualification proceedings, and the court may impose disqualification from acting as a director.
Frequently asked questions
Any person knowingly party to carrying on the business with intent to defraud — typically directors, but not limited to them.
Up to 10 years’ imprisonment on indictment, together with possible director disqualification.
Yes. Fraud under the Fraud Act 2006 focuses on dishonest representation; fraudulent trading focuses on carrying on a business with intent to defraud creditors over a period.