Estimated read time: 2 minutes
What happens to directors when a company fails: the offences, the personal liabilities and the investigations.
Chapter X of the Insolvency Act 1986 decides what happens to directors when a company fails: the offences, the personal liabilities and the investigations. This series walks through it one section at a time, in plain English, written by a solicitor who has spent thirty years on both sides of these cases, inside HMRC and advising clients across tax and insolvency.
Part 1 | Offences of fraud, deception and concealment
Sections 206 to 211. The criminal offences committed before and during a winding up: hidden assets, transfers to defeat creditors, obstructed liquidators, tampered records, incomplete statements and false promises. Six articles, each covering one section: who it catches, what must be proved, the consequences, the defences and how each provision plays out when HMRC is the driving creditor.
Section 206 – Fraud in Anticipation of Winding Up
The twelve month reach back, the acts the law treats as concealment, and the defence the section itself provides.
Section 207 – Transactions in Fraud of Creditors
The two limbs of the section, the five year reach back, and what a defensible transaction looks like on paper.
Section 208 – Misconduct in the Course of Winding Up
The five duties owed to the liquidator, the fictitious losses trap, and why delay reads as intent.
Section 209 – Falsification of the Company’s Books
The acts the section names, why shareholders are caught too, and why this section’s burden of proof works differently.
Section 210 – Material Omissions from the Statement of Affairs
What makes an omission material, the items that go missing most often, and how to complete the statement safely.
Section 211 – False Representations to Creditors
The line between forecast and fact in creditor negotiations, and why the burden here stays with the prosecution.
Femi offers a free 30-minute consultation to help you explore your options and protect your business. Reach out on 07867 795 439 or email [email protected] or [email protected]
Femi Ogunshakin – Solicitor & Tax Adviser