Fraudulent Trading (Companies Act 2006, s 993): “Fraudulent purpose” turns on dishonesty, not a requirement to plead/prove discrete acts of “misconduct”

Case: R v Beckett [2026] EWCA Crim 462 (CA (Crim Div))
Date: 24 March 2026
Judges: Lord Justice Edis (VP), Mr Justice Cavanagh, HHJ Conrad KC
Appeal from: Crown Court at Bournemouth (HHJ Jonathan Fuller KC)

1. Introduction

The Court of Appeal considered a prosecution that used Companies Act 2006, s 993(1) (“fraudulent trading”) to address what was, in substance, alleged consumer-facing dishonest trading by two companies selling loft insulation and roof-coating products. The appellant (the sole director) was convicted of two counts of fraudulent trading over a period from January 2017 to September 2018, one count per company (paras 2, 5–7).

The case is notable because the alleged victims were customers who generally received a product/service, but the prosecution alleged the businesses were carried on for a fraudulent purpose due to systematic unfair commercial practices: targeting older people, misleading claims about existing insulation and benefits, and pressure selling to bypass the statutory cooling-off period (paras 6, 16–18).

On appeal, the principal issues were:

  • What “fraudulent purpose” means in s 993, and whether the judge had to identify specific “misconduct” the jury must find (Ground 1; paras 25–45);
  • How alleged breaches of the Consumer Protection from Unfair Trading Regulations 2008 (“the 2008 Regulations”) could be used in a s 993 trial (Ground 2; paras 46–61);
  • Whether the judge’s answer to a jury question misstated the knowledge requirement and/or “ignorance of the law” (Grounds 3 and 5; paras 62–81);
  • Sentence: whether a 6.5-year term was manifestly excessive and whether analogy to fraud guidelines was legitimate (paras 83–114).

2. Summary of the Judgment

  • Conviction appeal dismissed. The directions on “fraudulent purpose” were “impeccable” and consistent with R v Hunter and Another [2021] EWCA Crim 1785; [2023] QB 1 (paras 31–45, 82).
  • The judge correctly treated the 2008 Regulations as potentially evidentially relevant but not determinative; the jury’s focus remained on s 993 (paras 49–61).
  • No misdirection on knowledge/dishonesty; “ignorance of the law” comment did not undermine the clear ingredients directions (paras 62–81).
  • Leave refused on Ground 4 (dishonesty direction challenge) as unarguable (paras 70–77).
  • Sentence appeal dismissed. The case was at the top end of the spectrum; analogy to fraud guidelines permissible but not mechanically applied; 6.5 years not manifestly excessive (paras 106–114).

3. Analysis

3.1 The statutory framework: s 993 Companies Act 2006

Section 993(1) criminalises being “knowingly a party” to the carrying on of “any business of a company” with intent to defraud creditors or “for any fraudulent purpose” (para 4). The maximum sentence is 10 years (para 4).

The prosecution case proceeded on the “fraudulent purpose” limb, not creditor fraud, contending the companies’ purpose was to make dishonest sales using unfair commercial practices (paras 5–13, 23–24).

3.2 Ground 1 and the core holding: “fraudulent purpose” is not an additional pleaded “misconduct” element

The appellant argued that, after R v Hunter and Another [2021] EWCA Crim 1785; [2023] QB 1, the jury must be directed that it was a purpose of the company that employees/agents would commit “fraud” through identifiable acts (e.g., deception), so the judge had to specify the relevant “misconduct” (paras 25–29).

The Court of Appeal rejected this as adding an ingredient not found in the statute (paras 39–42):

  • The statute requires only that “any business” is carried on “for a fraudulent purpose”; it does not require the judge to formulate a list of discrete misconduct categories that the jury must separately find (paras 39–41).
  • “Misconduct” may be evidence of the fraudulent purpose, but is “not itself an ingredient” (para 39).
  • Fraudulent purpose may be proved by a “patchwork” of acts/omissions and business organisation; requiring enumeration of each aspect would be impractical and risks trespassing into the jury’s fact-finding role (paras 40, 43).

Importantly, the court also rejected the submission that the judge’s use of the classic dishonesty formulations equated “fraud” with “deception” (paras 33–35). The court accepted (consistent with Hunter) that dishonesty is essential, and deception is common but not necessary (paras 32–33, 39).

3.3 Precedents cited and how they shaped the decision

(a) R v Hunter and Another [2021] EWCA Crim 1785; [2023] QB 1

Hunter was the decisive interpretive anchor. The court distilled and applied several propositions from it (para 31), notably:

  • s 993 is not constrained by conspiracy-to-defraud limitations (“common law tail… Parliamentary dog”) (para 31(1));
  • the purpose need only be “fraudulent” (para 31(2));
  • “fraudulent purpose” bears its ordinary meaning and is not limited to historic categories (para 31(4)–(5)).

On content, the court adopted Hunter’s explanation that dishonesty is central, deception is not synonymous with fraud, and the offence is “prophylactic” (purpose can exist before harm materialises) (paras 32–33, 38–40).

(b) Dishonesty formulations: Re Patrick & Lyon [1933] 786 Ch, Welham v DPP [1961] AC 103, R v Grantham [1984] 1 QB 675

The judgment endorsed the use of long-established formulations of dishonesty in commercial contexts:

  • “real moral blame” per Re Patrick & Lyon [1933] 786 Ch (quoted in Hunter) (para 32);
  • “stepping beyond the bounds of what ordinary decent people engaged in business would regard as honest” per Welham v DPP [1961] AC 103, approved in R v Grantham [1984] 1 QB 675 (paras 32–33).

The Court of Appeal treated the trial judge’s direction—“fraudulent purpose implies an intention” to go beyond those bounds—as a faithful application of those formulations (paras 33–35).

(c) Fraud without deception: R v Philippou 89 Cr App R 290

The judgment relied on Hunter’s reference to R v Philippou 89 Cr App R 290 to reinforce that concealment/suppression and other dishonest conduct may constitute fraud even absent classic deception (para 32).

(d) Dishonesty test structure: Ivey v Genting Casinos [2017] UKSC 67; [2018] AC 391

In responding to “knowledge” criticisms, the court reaffirmed that there is no requirement that a defendant appreciates that their conduct is dishonest by ordinary standards; once the defendant’s actual knowledge/belief as to facts is found, dishonesty is assessed objectively (para 68, citing Ivey v Genting Casinos [2017] UKSC 67; [2018] AC 391 at [74]).

(e) Sentencing comparators and methodology: R v Mackey [2012] EWCA Crim 2205, R v McCrea and Others [2012] EWCA Crim 976, R v Ali [2019] EWCA Crim 1263, R v Rattu [2021] EWCA Crim 757; [2021] 1 Cr App R(S) 2

On sentence, R v Mackey [2012] EWCA Crim 2205 supplied a non-exhaustive list of relevant factors for fraudulent trading (para 94) and recognised wide spectrum offending (para 108). R v McCrea and Others [2012] EWCA Crim 976 supported the legitimacy of analogy to fraud-type guideline approaches where appropriate (para 107).

The court treated attempts to “benchmark” by reference to Mackey, Ali, and Rattu as of limited utility given factual variability (paras 108–109), but accepted that fraud-guideline language can assist where the conduct is comparable—provided it is not applied mechanistically (paras 106–108).

3.4 The 2008 Regulations: evidential relevance without conflation (Ground 2)

A recurring practical issue in “consumer harm” s 993 cases is how to use regulatory material without turning the trial into a “breach of regulations” prosecution. Here, the Regulations were before the jury by agreement (para 46), and the judge directed that:

  • unfair trading practices were not a required element of s 993 (para 21 of directions; para 49);
  • if breaches were proved, they could assist the jury on dishonesty/fraudulent purpose, but were “not the sole determinants” (paras 21, 37, 52);
  • it remained for the jury to decide what, if any, significance to attach to them (paras 21, 52).

The Court of Appeal upheld this as a balanced approach: jurors can regard regulatory prohibitions as informing what “ordinary decent people engaged in business” would consider honest, particularly where there is evidence of awareness/compliance structures (paras 50–51). The court also relied on the judge’s later remarks reiterating that the Regulations were “not the focus” (paras 59–61).

3.5 Knowledge, “ignorance of the law”, and jury questions (Grounds 3 and 5)

The jury asked whether mens rea allowed “negligence/ignorance of the law” and whether knowing conduct near the “border of legality” but believed lawful could suffice (para 63).

The Court of Appeal held the judge’s answer was not a misdirection:

  • “Knowledge” meant knowledge of the business’s fraudulent purpose (para 64), not negligence (para 64);
  • “Ignorance of the law” is not a defence where the offence ingredients are proved (para 64), and the jury could not reasonably interpret that as diluting the need to be sure of fraudulent purpose/knowledge/dishonesty (paras 79–81).

3.6 Sentencing: when fraudulent trading reaches the “top end”

The court characterised the offending as an “industrial scale” consumer fraud enterprise targeting vulnerable victims, with high pressure selling, misrepresentation, and a model designed to defeat cooling-off rights (paras 83–86, 109). It endorsed the trial judge’s decision to sentence (if anything generously) on the basis of the 30 witness cases as the proved scope (paras 87–88).

Key sentencing takeaways include:

  • Analogy, not transposition: fraud guidelines can inform but should not be applied as if directly governing s 993 (paras 89, 106–108).
  • Goods/services supplied is not decisive mitigation: where victims were pressured/misled into purchases they did not need, at gross mark-ups, with limited/no benefit and possible property value harm (paras 98, 112).
  • Aggravation: leadership/control, targeting vulnerability, contempt for victims, deterrence, operating while on licence, absence of remorse (paras 96–97, 110–111).
  • Delay: little weight where complexity and investigative burden were materially driven by the way the business operated (para 113).

4. Impact

4.1 Charging and trial strategy

The decision confirms that s 993 is not confined to creditor/investor fraud and can, in an appropriate case, capture systemically dishonest consumer trading models (paras 6, 109–112). This matters where:

  • regulatory offences (e.g., under the 2008 Regulations) are time-barred or viewed as under-reflecting culpability due to lower maxima and absence of dishonesty as an element (paras 12–14);
  • the prosecution wishes to present dishonesty as the organising principle of the business model rather than as discrete “counts per victim”.

4.2 Jury directions: resisting over-particularisation

The judgment discourages a defence-driven reframing of s 993 into an offence requiring the judge to identify and isolate “the” specific misconduct which must be found. The court’s approach permits juries to evaluate fraudulent purpose from the overall pattern of organisation and practices, while remaining anchored to the statutory ingredients (paras 39–43).

4.3 Regulatory context evidence

The court’s approval of the way the 2008 Regulations were handled supports a pragmatic model: regulatory rules can be placed before the jury as context and evidence bearing on dishonesty/fraudulent purpose, provided the judge makes clear that the trial is not about “proving breaches of regulations” (paras 49–61).

4.4 Sentencing range realism for consumer-focused fraudulent trading

The dismissal of the sentence appeal signals that where fraudulent trading is used to prosecute “consumer fraud at scale” with targeted vulnerability and severe psychological impact, sentences can approach the top end of the spectrum notwithstanding that some product was delivered (paras 109–114).

5. Complex concepts simplified

  • “Fraudulent purpose” (s 993): a business purpose that is dishonest by the standards of ordinary decent people in business. Deception often evidences it, but deception is not essential (paras 32–33, 39).
  • “Prophylactic” offence: the law targets the existence and carrying-on of a business with a fraudulent purpose; it need not be shown that the fraud succeeded in every instance (paras 32, 38).
  • “Knowingly a party”: participation in carrying on the business in that way with knowledge of the fraudulent purpose; it is not satisfied by mere negligence (paras 7, 64).
  • Dishonesty after Ivey v Genting Casinos [2017] UKSC 67; [2018] AC 391: decide what the defendant actually knew/believed about the facts; then apply an objective standard of ordinary decency to decide if it was dishonest—no requirement that the defendant realised it was dishonest (para 68).
  • Regulatory breaches vs criminal fraud: contravening consumer regulations does not automatically equal fraud, but can be evidence from which a jury may infer dishonest trading (paras 49–52).

6. Conclusion

R v Beckett [2026] EWCA Crim 462 reinforces a broad, statute-led understanding of fraudulent trading under Companies Act 2006, s 993: “fraudulent purpose” is assessed by ordinary meanings and commercial dishonesty standards, without importing an extra requirement to plead or prove discrete categories of “misconduct”. The decision also provides a practical template for using the 2008 Regulations as context/evidence without conflating regulatory breaches with s 993’s ingredients, and it confirms that large-scale, vulnerability-targeting consumer fraudulent trading can properly attract substantial custodial sentences even where some goods/services were supplied.