Fraudulent Trading is a serious offence committed when a business or organisation intentionally conducts transactions with the intention of defrauding those with whom it conducts business, its creditors or others.
The key issue in such cases is whether or not there has been any dishonesty. However, other factors may be present leading to the allegation of fraud, such as:
- Simple naivety
- bad business management
- bad business decisions
- in the case of companies where there is more than one director a lack of communication between them as to the true financial standing of the company.
Whilst situations of this nature do not necessarily amount to criminal intent on the part of one or more of those involved, examples of where the criminal intent is clear are:
- Long Firm Fraud: A company will set up a number of small credit accounts which will be operated legitimately and efficiently whilst building trust and good business relations with suppliers. Having secured such trust, larger orders are placed and the company and its director(s) then disappear with the goods, not having paid for them.
- Short Firm Fraud: A company will buy as much as it can on credit instantly, before disappearing with the goods. This type of fraud is becoming more common as the result of internet based trading.
Fraudulent Trading – The Law | Kangs Trading Frauds Solicitors
The law is set out in section 993 of The Companies Act 2006, (as extended by Section 9 of The Fraud Act 2006, to cover all types of businesses including sole traders), and applies regardless of whether or not a company has been wound up or is in the course of being wound up.
Under this section, if any business of a company is carried on with intent to defraud creditors of the company or of any other person, or for any fraudulent purpose, every person who is knowingly a party to the carrying on of the business in that manner commits an offence.
Section 9 of The Fraud Act 2006 applies when fraudulent trading is committed by businesses that are unincorporated and covers businesses that are operated by partnerships, sole traders or employees connected with such businesses.
These two Acts are in addition to the provisions of the Insolvency Act and Consumer Credit Act and are designed to strengthen the framework of Criminal Legislation by ensuring that dishonest business practise can be prosecuted.
Fraudulent Trading Investigations | Kangs Corporate Defence Solicitors
Fraudulent Trading Investigations usually arise as a result of complaints to the Police,Trading Standards or other agencies by creditors who have lost money as a result of a business ceasing to trade, disappearing or going in to liquidation leaving unpaid debts.
The manner in which you approach any interview conducted by the authorities can have far reaching and serious consequences and, accordingly, it is important that you seek expert legal advice from the offset so that your position can be protected as fully as possible.
How We Can Help You | Kangs Fraud Solicitors
A charge of fraud can be very distressing and investigations in to such allegations can be very lengthy, impacting on the lives of those involved drastically.
Kangs Solicitors are regularly instructed by company directors and other businesses facing criminal investigation.
We are ranked in Band 1 nationally by the legal directory Chambers & Partners for our work in financial crime and fraud cases:
The financial crime team at Kangs Solicitors is led by Hamraj Kang who is ranked as a ‘star individual’ by Chambers and Partners, a recognition given to only one other Solicitor nationally:
Our team of Specialist Fraud Solicitors can advise individuals and companies at any stage of a fraud investigation and we can represent you from the initial arrest and interview stage through to Trial.
Who Can I Contact For Help? | Kangs Solicitors
If you or your business are being investigated or have been charged with any offence alleging fraudulent activity of any nature, we are here to assist and advise and our team of dedicated fraud solicitors has a proven track record of successfully defending many individuals and businesses facing such situations.
Please do not hesitate to contact our team through any one of the following for an initial consultation: