Alleging Uncharged Breaches of CPUTR to Prove Fraudulent Trading.
Victor Smith notes that the Court of Appeal, in R v Beckett, accepted that establishing breaches of the CPUTR, although not themselves charged as offences, could assist in proving fraudulent trading. He questions, however, the wisdom of doing so when it appears from the facts that it introduced an unnecessary complication and distraction. First published in Consumer Crime Cases on 19 June 2026.
In R v Beckett [2026] EWCA Crim 462, D was prosecuted, under s 993(1) Companies Act 2006, for knowingly being a party to the carrying on of the business of a company for a fraudulent purpose, in relation to two companies of which he was the sole director. Those companies had sold foam loft insulation and associated products and services turning over more than £10 million over an 18-month period. They targeted older people and lied about the standard of customers' existing insulation and about the quality, performance and financial benefits of the products they sold. The companies pressurised customers into doing deals within 14 days to avoid the statutory cooling off period. D, whose personal gain was £850,000, was convicted and sentenced to a total of six and a half years' imprisonment. D appealed against both conviction and sentence. Those grounds of appeal against conviction, which contained points of law, required in particular, consideration of the meaning of "for any fraudulent purpose", whether some form of specific misconduct had to be proved and the relevance of breaches of CPUTR under which no charges had been brought. D asserted that his sentence was manifestly excessive.
The Court of Appeal dismissed D's appeal in its entirety. It was held, inter alia, that although dishonesty was a necessary element of fraud, deception was not. There could be a fraudulent purpose even if the objective, such as sales, was not achieved. Although misconduct could be evidence of a fraudulent purpose, it was not an ingredient of the offence of fraudulent trading and so proof of specific misconduct was not required. It was also held that, although fraudulent trading did not require proof of unfair trading practices, breaches of the CPUTR could help in determining whether a company had acted beyond what ordinary, decent, people engaged in business regard as honest. Such breaches were also relevant to establishing D's dishonesty; whether he knew or believed the business of the companies contravened legislation which was designed to catch sharp practices and rogue traders.
The Court of Appeal appears to have vindicated P's reliance on evidence that D's company had breached the CPUTR as an aid to proving that he had offended under s 993(1) CA 2006. Specifically, this was in the context of "dishonesty"; of showing that "the company had been acting beyond the bounds of what ordinary and decent people engaged in business would regard as honest". It is not clear, however, whether P would have been permitted, at D's trial, to allege offending for which he had not been charged had D not agreed to P introducing the CPUTR and apparently not objecting to P asserting that they were breached.
There is no reference in the Court of Appeal's judgment to what CPUTR offences D's companies were said to have offended against. Indeed, no individual regulations are cited at all. The facts suggest that the companies had potentially contravened, at least, reg 8 (knowingly or recklessly engaging in a commercial practice which contravened the requirements of professional diligence) and reg 9 (engaging in a commercial practice which is a misleading action – false information) and probably reg 7 (engaging in an aggressive commercial practice). P was ultimately seeking to prove, as per s 993(1) CA 2006, that D was knowingly a party to the carrying on of his companies' businesses for a fraudulent purpose. The judgment observes that P asserted that the business practises of the companies "went well beyond the bounds of what ordinary decent people engaged in business would regard as dishonest [sic], and therefore amounted to fraudulent trading." In Welham v DPP [1961] AC 103] it was held that whether a business was acting fraudulently depended on whether it was acting beyond the bounds of what ordinary and decent people engaged in business regarded as honest. As reg 2 CPUTR gives one definition of "professional diligence" as "the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers which is commensurate with … honest market practice in the trader's field of activity", it is likely that P had focused on a contravention of reg 8. However, it would have been a circular and fatuous argument to have asserted that the companies had breached reg 8, because their business practices were not commensurate with "honest" market practises, and to then assert that, because they had breached reg 8, they had exceeded what business practise would regard as "honest" and had therefore traded fraudulently. Furthermore, the Court of Appeal noted that P had not prosecuted under the CPUTR, in part, because "dishonesty is not a constituent element of the regulatory offences".
The CPUTR are not easy to navigate and, by making any reference to them, P risked unnecessarily complicating and prolonging the trial and confusing the jury. As the Court of Appeal said, the jury would, "in any event, have been aware that the law laid down trading standards for businesses." Moreover, surely any jury/court would have found D's companies to have been "acting beyond the bounds of what ordinary and decent people engaged in business would regard as honest" regardless of whether such acts constituted breaches of industry standards. How could anyone not, for example, regard it as dishonest for a business to tell lies to its potential customers in order to sell, or attempt to sell, its products?