IVA Glossary
F
Fraudulent Trading
Fraudulent trading involves the cases when companies do carry out business trading that will defraud their creditors. Between businesses it is not uncommon to meet such fraudulent practices, and that is why it is so important that there is always legal backup existent.
Fraudulent trading provisions can be found in the Companies Act of 2006, part 29. Moreover, organizations such as Financial Services Authority and Department for Business and the HMRC (or H and M Revenue and Customs) may provide full and concise information on fraudulent trading practices and legislature.
If fraudulent trading is being proved in court, the guilty parties may be liable to imprisonment, not to mention the fact that they will have to pay a considerable amount for fines. It is easy to recognize fraudulent trading within a company, as there are certain characteristic aspects showing it. Among others, one can mention the case when there are profits or losses present which seemingly have no well founded explanation. Another path leading to fraudulent transaction is the case when administrators of the company undergo trading businesses without making sure in prior that there are enough funds which will cover for that respective business trade.
Accountancy mistakes or deliberate mistakes are also a clear sign of fraudulent trading. Last but not least the activity of "cross firing" is yet another offence pointing to fraudulent trading.
Fraudulent trading provisions can be found in the Companies Act of 2006, part 29. Moreover, organizations such as Financial Services Authority and Department for Business and the HMRC (or H and M Revenue and Customs) may provide full and concise information on fraudulent trading practices and legislature.
If fraudulent trading is being proved in court, the guilty parties may be liable to imprisonment, not to mention the fact that they will have to pay a considerable amount for fines. It is easy to recognize fraudulent trading within a company, as there are certain characteristic aspects showing it. Among others, one can mention the case when there are profits or losses present which seemingly have no well founded explanation. Another path leading to fraudulent transaction is the case when administrators of the company undergo trading businesses without making sure in prior that there are enough funds which will cover for that respective business trade.
Accountancy mistakes or deliberate mistakes are also a clear sign of fraudulent trading. Last but not least the activity of "cross firing" is yet another offence pointing to fraudulent trading.
