False accounting
Under the Theft Act (TA) 1968, s17 false accounting is where a person knowingly falsifies or conceals information needed for accounting purposes, which may extend beyond statements and to tax and VAT records.
According to TA 1968, false accounting is committed intending to gain or cause loss to another. The offence can be perpetrated in two ways, by:
- • falsifying, defacing, damaging, concealing, or omitting information from documents required for accounting
- • using false or deceptive materials for any purpose knowing the information is misleading
The “gain” or “loss” is not to be construed only to money or property, as it could also mean to gain by remaining in possession of what one already has, or gaining what one has not got. In a company’s circumstances, it may be to appear stronger than rival businesses.
If a company commits the offence, with the consent or cooperation of a chief executive, manager, or officeholder, both the individual and the company may be liable and prosecuted by the court.
When a person commits the offence, whether that be for producing an account or document that is deceptive, false, or misleading, or omitting material from an account or record, the person is liable for false accounting and is liable to be proceeded against and punished accordingly.
Investigations into false accounting can be complicated, so seeking legal advice at an early stage can help to prevent errors and misjudgements later on.
How is false accounting sentenced?
False accounting is a serious offence that could carry a custodial sentence if the crime is deemed severe.
The offence may be tried in the magistrates‘ court or the Crown Court. If the defendant is being convicted in the magistrates’ court, the maximum penalty the offender could receive is six months imprisonment, a fine or both depending on the severity of the offence and the person’s role in the crime.
On conviction on indictment in the Crown Court, the accused is liable to pay a fine, face a maximum penalty of seven years in incarceration, or both depending on the level of culpability. If the defendant is a company, the court may issue an ancillary order, and any persons in positions of authority may face disqualification from directing the company.
Typically ancillary orders are added to the penalty of those found guilty. Other ancillary orders include:
- Compensation for loss
- Reparation orders
- Confiscation orders and
- Financial reporting
When sentencing false accounting, courts will apply the sentencing guideline for fraud published by the Sentencing Council, which assesses the offence by culpability and harm, to best determine the defendant’s liability.