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Dealing with Fraudulent Practices

If your business has been a victim of fraud, it is likely to have had a highly damaging impact.

What to do if your business has been defrauded

Regardless of the relative size of your company, the steps you may want to take after falling victim to fraud are:

  • Assess how the perpetrator has been able to defraud your business.
  • Put measures in place to stop it happening again.
  • Report the fraudulent activity to a government body such as the Serious Fraud Office (SFO) or the Insolvency Service.
  • Report to your insurer

Whom to report to

The Serious Fraud Office only deals with the most serious and complex fraud cases (which involve sums of money of more than £1m), so they might not be the appropriate people to report to.

If the fraud is not on this level, complaints about fraudulent activity within an organisation may be made to the Insolvency Service.

If a complaint is considered serious enough, the Insolvency Service will either carry out an investigation or pass the case on to another public body. If enough evidence of wrongdoing is found, they can ask a court to either:

  • close the company down
  • disqualify the directors of the company

It may also be possible to report a company to Companies House, if it has committed the specific offence of filing fraudulent documents.

You may also report the matter to Action Fraud. Action Fraud is the UK’s national reporting centre for fraud and internet crime where you should report fraud if you have been scammed, defrauded or experienced cyber-crime.

To report an instance of fraud you can call Action Fraud on 0300 123 2040, textphone 0300 123 2050 or report it online at

If fraud has taken place within your organisation

If you suspect that fraud has occurred within your organisation, the Serious Fraud Office recommends the following steps:

  • seeking advice from your professional advisors
  • conducting a full investigation
  • taking remedial action against those involved

After investigating the issue, you may wish to report it to an enforcement or regulatory body. If this is the case then you should be sure to preserve any evidence so that it can be used in a later external investigation.

The SFO recommends self-reporting as the best approach for businesses which have uncovered fraud in their ranks, due to it being ethical and also potentially mitigating any punishment.

Reporting an instance of suspected fraud to the SFO is a difficult decision, but if you are going to do it then it should be done as soon as possible to give them the maximum amount of time to consider how the case should be dealt with. There may also be more time to gather evidence which might secure the outcome you desire.

If you do not act quickly in reporting the suspected fraudulent activity, then it may be reported by someone else, meaning the disruption to your business may be harder to handle, and you may also have less control over any resulting publicity.

Once your case is in the hands of the SFO they will keep you informed of how it is progressing.

You should seek legal advice about taking disciplinary action against any employees.


A member of your staff may report fraudulent activity. As an employer you may wish to have a whistleblowing policy in place to deal with such an eventuality. In a whistleblowing policy you can set out to your employees how they should report any wrongdoing and give details of exactly how such instances will be dealt with.

You should look to ensure that disclosures are investigated promptly and the whistleblower is kept informed where appropriate. Your policy should also make it clear that victimisation of a whistleblower will lead to disciplinary action. A template Employer’s Whistleblowing Policy can be downloaded from our Law Shop.

The member of staff should either report the issue to you, their employer, or to the relevant prescribed person or body (e.g. HMRC, Health and Safety Executive etc).

Disclosure to an external body (other than the prescribed body) such as the media will only be protected if the worker believes that the information is substantially true and they are not making the disclosure for a gain. Disclosure must first be made to the employer or the prescribed person unless in exceptional circumstances where the worker believes any of the following:

  • the matter would be covered up /evidence would be destroyed
  • they would be treated unfairly for raising the issue
  • they had raised the issue before but it hadn’t been sorted out
Disclosure to the external person must also be reasonable.

Employees cannot be dismissed for whistleblowing, and if they are they can claim for automatically unfair dismissal. It is also unlawful for an employer to subject a worker to a detriment for making a protected disclosure.  This is as long as what they have reported is a ‘qualifying disclosure’ or the worker reasonably believes it to be so – these include:

  • criminal offences
  • covering up for wrongdoing
  • evidence of the company not obeying the law

Disclosures made on or after 25 June 2013 will only be protected if the worker reasonably believes that the disclosure is "in the public interest”.

Whistleblowing is a complex area of law and you should seek professional legal advice on your individual case.