Can I go to jail for limited company business fraud?

Can I go to jail for business fraudParticipating in business fraud carries grave legal implications that can result in imprisonment and the potential for arrest. If there are indications of fraudulent activities within a business, the matter may be escalated to a criminal investigation conducted by the Department for Business, Innovation and Skills (BIS).

The severity of the offense, along with the evidence collected during the investigation, will determine the course of action taken by law enforcement authorities. While the discovery of fraudulent behavior does not guarantee immediate arrest, it is crucial to understand that individuals found guilty of business fraud may face incarceration as a consequence of their actions.

In such cases, the BIS or relevant law enforcement agencies will thoroughly examine the evidence, financial records, and transactions associated with the suspected fraudulent activities. Factors such as the scale of the fraud, the financial losses incurred by victims, and the intent behind the fraudulent behavior will all be taken into account during the investigation.

Moreover, the legal framework and specific statutes related to fraud in the jurisdiction where the offense occurred will play a significant role in determining the potential criminal charges and penalties that may be imposed.

Can I go to jail for business fraud? Could I be arrested?

It is worth noting that the presence of mitigating or redeeming circumstances can influence the outcome of the investigation. If the accused can demonstrate that there were extenuating circumstances or provide evidence to support a lack of intent or knowledge of the fraudulent activities, it may lead to a more favorable resolution. Additionally, cooperating fully with the authorities, making restitution to victims, or implementing measures to rectify the situation may be considered when determining the appropriate legal action.

Nevertheless, it is crucial to understand that business fraud is a serious offense that undermines trust in the marketplace, harms individuals and organisations, and erodes the integrity of the economy. As a result, legal systems often impose strict penalties to deter fraudulent activities and ensure accountability.

If you suspect that you may be involved in fraudulent practices or if you have concerns about potential fraudulent activity within your business, it is advisable to consult legal counsel promptly to understand your rights and responsibilities. Taking proactive measures to rectify any wrongdoing and cooperate with the relevant authorities can significantly impact the outcome of the investigation and potentially mitigate the legal consequences one may face.

Some factors that might be taken into account in each situation are as follows:

  • Dimensions of the fraud

Was it a large-scale enterprise or a singular offence? A well-thought-out scheme to deceive the system will undoubtedly result in a harsher sentence.

  • The victims of the fraud?

Was the general public or creditors directly impacted by what transpired? Even while the matter will likely be investigated if a significant, discernible loss occurred, you might not really be arrested

  • Do you have a track record of acting in a director-unfit manner?

The results of a case could be impacted by your prior experience as a board member of a corporation.

What might constitute business fraud?

  • Trading whilst insolvent

Some directors engage in this with good intentions but without realising they are breaking the law. Others, however, purposefully collect deposits from clients even when they are unable to deliver the requested good or service.

  • Already disqualified as a director?

The Company Director Disqualification Act of 1986 is broken when a person who has already been disqualified from acting as a company director or giving someone else direction over a firm.

  • Selling assets at an undervalue to a ‘phoenix’ company

Pre-pack administration, or “phoenixism,” as it is also known, is undoubtedly a legal service, but issues might occur when directors “sell” the firm’s assets to the new company for less money than they are worth. When the company is liquidated, this reduces the amount of money that will be accessible to the creditors.

  • False accounting

In order to paint a picture of a successful corporation, this may entail inflating revenue and profits or understating the amount of company liabilities. The intent is to artificially increase the share price of the firm while also concealing financial difficulties and securing financing that would not otherwise be possible.

It’s important to be aware that HMRC conducts voluntary disclosure campaigns for businesses operating in particular industries, enabling them to “come clean” about violations and potentially avoiding criminal prosecution. Online dealers, medical professionals, electricians, and those with unfiled tax returns or unreported overseas investments are a few of the industries that have already come under attack.

Read more: Cifas Protective Registration

Frequently asked questions

What are the consequences of frauds to company?

The consequences of frauds to company may result in bankruptcy, delisting from the stock exchange, assets disposals, and change of senior management. These changes are directly linked to the long-term success of the organization.

What criminal Offences can a company director have in the UK?

Company directors can face criminal offences, including health and safety offences, corporate manslaughter and those more commonly encountered in business contexts such as fraud, bribery, false accounting and certain Companies Act offences.


In conclusion, fraud committed by company directors is a serious offense with far-reaching consequences. The possibility of facing a custodial sentence underscores the importance of seeking appropriate legal advice when navigating such complex situations. By consulting with legal professionals who specialize in business law and fraud cases, individuals can better understand their rights and obligations, as well as develop strategies to prevent and mitigate potential legal repercussions.

Taking proactive measures to rectify any fraudulent activities, cooperating fully with authorities, and seeking professional advice can significantly impact the outcome of an investigation, potentially avoiding the harsh consequences of imprisonment.

If you have concerns about fraudulent practices or need legal guidance, I encourage you to take action now by completing an online enquiry to connect with experienced professionals who can provide the assistance you need. Safeguarding your business and personal interests starts with seeking the right advice.

David Hanman Consultant Solicitor

David is a Solicitor and Chartered Tax Advisor. David has many years experience of advising clients on Regulatory Fraud matters, involving the smallest to the very biggest cases.

He regularly lectures to the City of London Police on these and related issues. He regularly advises on Confiscation and other consequences that flow from money laundering offences