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Fraudulent trading: a forensic accountant’s perspective

© Copyright LexisNexis 2025. All Rights Reserved.
24 November 2023 / Rakesh Kapila
Issue: 8050 / Categories: Features , Profession , Expert Witness
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Rakesh Kapila considers the financial aspects of fraudulent trading
  • Types of fraudulent trading.
  • Information to be examined.
  • Issues relating to the financial position of the business.

A person commits the offence of fraudulent trading if he or she is knowingly party to the carrying on of a business either with intent to defraud creditors or for any other fraudulent purpose. Although defendants in fraudulent trading cases are often company directors, the Fraud Act 2006 extended the scope of the offence to include sole traders and partners. The offence may ‘catch’ professional advisers acting in executive roles.

Fraudulent trading occurs when a business continues to trade at a time when there is, to the knowledge of the business’s management, no reasonable prospect of creditors ever receiving payment. This includes a situation in which there are no good grounds for thinking that the business can pay its debts even if its management considers that it can. The standard is objective.

In order to appreciate the types of fraudulent trading and the associated

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