Fraudulent Trading

Get immediate, expert advice from our fraudulent trading defence experts

Fraudulent trading is a serious criminal offence that carries a maximum possible sentence of 10 years’ imprisonment, a fine or both. If you are under investigation for fraudulent trading, have been charged with an offence or are concerned about a potential charge, you must seek legal advice now.

For immediate, expert advice and representation for a fraudulent trading offence, please contact our 24-hour emergency criminal defence line.

At Lovell Chohan, we can provide seasoned, practical advice on how to respond to an investigation or charge for fraudulent trading. We can also offer early advice if you are facing insolvency and are concerned that your business activities could be questioned.

Getting the right legal advice at an early stage can significantly reduce the risk of an investigation or prosecution. If a prosecution is unavoidable, the right advice and representation can make a huge difference to the outcome, giving you the best chance of retaining your liberty and protecting your future.

To discuss a potential fraudulent trading offence, you can contact our local offices in Hounslow, Slough and Twickenham.

Our expertise with fraudulent trading defence

With decades of experience, our criminal defence team have represented clients facing the most serious charges in connection to wide range of alleged offences, including fraudulent trading.

Our fraudulent trading defence solicitors can advise on alleged offences including:

  • Operating an insolvent business with the intent to defraud creditors (offences under section 993 of the Companies Act 2006)
  • Long firm fraud
  • Short firm fraud
  • Advanced fee fraud

We have represented clients in proceedings brought by investigating bodies including:

  • Her Majesty’s Revenue and Customs (HMRC)
  • The Financial Services Authority (FSA)
  • The Serious Fraud Office (SFO)
  • The Serious and Organised Crime Agency (SOCA)
  • The Crown Prosecution Service (CPS)

We have achieved outcomes for our clients such as:

  • Having an investigation concluded early with no charges brought
  • Successfully defending clients in court proceedings
  • Negotiating plea deals for lesser offences
  • Securing lower penalties where conviction is inevitable
  • Appealing unsafe convictions

Fraudulent trading FAQs

What is fraudulent trading?

When people talk about fraudulent trading, they are normally referring to the specific offence of fraudulent trading under section 993 of the Companies Act 2006. This is where a business has been operating with the intent to defraud its creditors and is a criminal offence.

Fraudulent trading is normally uncovered during the winding up or administration of a business that has become insolvent.

Examples of fraudulent trading include:

  • Taking credit from suppliers when there was no reasonable prospect of the business being able to repay
  • Taking deposits from customers for products or services you know will not be delivered
  • Repaying loans to the company from directors before repaying other creditors

The penalty on conviction for fraudulent trading is up to 10 years’ imprisonment, a fine or both. Directors are also likely to face disqualification from being a director if convicted of fraudulent trading.

What is the different between fraudulent trading and wrongful trading?

Wrongful trading is a civil offence rather than a criminal offence and is covered by section 214 of the Insolvency Act 1986.

Key points for a wrong trading offence are that the company directors:

  • “Knew, or ought to have concluded that there was no reasonable prospect of avoiding insolvent liquidation”
  • Did not take “every step with a view to minimising the potential loss to the company’s creditors”

The key difference between fraudulent trading and wrongful trading is that, for a fraudulent trading conviction, the prosecution must show that directors had a clear intent to defraud their creditors and customers.

Examples of wrongful trading may include:

  • Directors taking excessive salaries that the company cannot afford
  • Failing to operate a VAT scheme correctly
  • Failing to operate a PAYE scheme correctly
  • Failure to file proper accounts at Companies House

Who can be held legally responsible for fraudulent trading?

Company directors can be held personally liable for fraudulent trading, but the prosecution must be able to show that they clearly intended to defraud their creditors or customers.

If this intent cannot be shown, then it may be that directors will face conviction for a lesser charge of wrongful trading. Agreeing to plead guilty to a charge of wrongful trading can often be an effective defence strategy where avoiding conviction altogether is not a realistic prospect.

What is long firm fraud?

Long firm fraud is a specific type of fraudulent trading where a company has been created with the sole intention of defrauding creditors.

The typical way this type of fraud works is that a company will be set up and it will then establish accounts with a number of suppliers. The business will then order goods from those suppliers on credit and settle the accounts quickly to build up a good credit rating with those suppliers. The business will then order much larger quantities of goods which will never be paid for.

Long firm fraud is often considered the most serious form of fraudulent trading as the company involved was never legitimate and it is normally carried out by experienced criminals, rather than be a crime of opportunity as with some other types of fraudulent trading.

What is short firm fraud?

Short firm fraud is another type of fraudulent trading where a business orders goods from a supplier and then never settles the account. The difference from long firm fraud is that the business does not spend time building up credit with suppliers first, so the level of credit and amount of goods involved is usually lower.

What is advance fee fraud?

Advance fee fraud is a type of fraudulent trading where a business or individual offers goods, services or some form of financial gain in exchange for an upfront fee. Once the fee is paid, the promised benefit is never delivered.

Speak to our criminal defence solicitors in London now

We operate a 24-hour emergency criminal defence line if you need immediate advice on allegations of fraudulent trading.

For non-emergency advice in relation to a potential fraudulent trading offence, you can contact our local offices in Hounslow, Slough and Twickenham.