We’ve recently been asked by a number of clients whether there’s a difference between civil and criminal fraud. For most of these clients, they are trying to understand whether a civil case would prevent criminal proceedings, or vice versa.
In June 2022, Sir David Calvert-Smith delivered his independent review on the Serious Fraud Office’s (SFO) handling of the Unaoil case (R v Akle and Bond  EWCA Crim 1879) to the Attorney General. The review identified several failings by the regulator, including:
- Record keeping within the SFO was incompatible with the requirements of the Criminal Procedure and Investigations Act 1996. On many occasions, communications were not passed to the case team to allow it to consider disclosure obligations.
- Disclosure failings also resulted from the failure to address fundamental case strategy and progress issues.
- There were not enough resources allocated to the case.
- The case team and senior management did not understand each other’s priorities in terms of managing the case.
- Distrust between the case team and senior management was amplified through the latter’s dealing with a former US Drug Enforcement Agency agent.
The report is the latest in an extensive list of criticisms regarding the SFO’s performance in terms of successfully prosecuting business crime. Although this makes it easier for criminal defence solicitors to successfully defend their clients, it has led individuals and companies who allege they have been victims of fraud to bring civil cases instead of or directly after criminal proceedings. In this article, we explain the difference between criminal and civil fraud by answering some of our clients’ most frequently asked questions.
What is the difference between civil and criminal fraud?
Criminal fraud is where a prosecuting authority such as the SFO, or in rare instances an individual or company (known as a private prosecution) have enough evidence to bring the matter before the Magistrates Court or Crown Court. If the defendant is found guilty, they can be fined or imprisoned.
In civil fraud cases, the person or business alleging that they are the victim of fraud (known as the claimant) brings a case in the civil court to recover their property and/or receive compensation.
Are the standards of proof the same in a civil and criminal fraud trial?
No, and this is one of the main reasons the civil route is being used more frequently. The standard of proof in a criminal case is beyond reasonable doubt and this is exceptionally hard to meet in fraud cases. In civil cases, the standard of proof is on the balance of probabilities, which is considerably lower than the criminal threshold.
Can a civil and criminal fraud case run concurrently?
Yes, both cases can run at the same time unless the defendant would suffer a real risk of prejudice which could lead to injustice.
Can HMRC bring a criminal prosecution for tax fraud?
HMRC can investigate and prosecute tax fraud cases. If you are facing an HMRC investigation it is crucial you contact an experienced tax fraud solicitor as quickly as possible.
What are the defences available for fraud?
The most common defence to a criminal charge or civil allegation of fraud is the lack of dishonesty on the defendant’s part. For example, a director is accused of false accounting, however, they believed the financials they submitted were correct or genuine errors were made.
Establishing dishonesty is exceptionally difficult. The court will use the below two-stage test set out by the Supreme Court in Ivey v Genting Casinos (UK) Ltd t/a Crockford  UKSC 67 when deciding if dishonesty is present:
- What was the defendant’s actual state of knowledge or belief as to the facts?
- Irrespective of the defendant’s belief about the facts, was their conduct dishonest by the objective standards of ordinary decent people?
Other defences available for criminal fraud include insanity, necessity, duress, mistake, self-defence, and automatism. These are known as general defences and one or more may or may not be available to you depending on the circumstances of your case.
Can my assets be frozen if I am a defendant in a civil case?
Yes, advising and representing clients on the lifting of injunctions, including worldwide freezing orders, is an essential part of a fraud defence lawyer’s job. A freezing order will prevent you, as the defendant, from disposing of or dealing with your assets in the UK and/or abroad. The courts understand the negative impact freezing orders can have, not only on a defendant, but their family and third parties such as business partners, therefore, these types of injunctions are only imposed if certain conditions are met.
If you are defending a civil or criminal fraud allegation you must invest in expert legal advice. Your reputation, financial well-being, and in criminal proceedings, your freedom, may be at stake. A fraud solicitor will ensure you have a robust defence, and your best interests are protected at all times.
Reeds Solicitors is an award winning and leading top-tier criminal defence firm. If you are facing an investigation or prosecution concerning a financial crime, our specialist fraud Solicitors can help. For legal advice and representation, You can contact us through our contact page here. Alternatively you can phone 0333 240 7373, or email us at firstname.lastname@example.org.