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Notes for Guidance - Bankruptcy (Scotland) Act 2016 (as amended)

This guidance describes the general functions of Accountant in Bankruptcy, interim trustees, trustees and commissioners in relation to their responsibilities regarding bankruptcies which started on or after 30 November 2016.

18.6 Suspected offences by the debtor

This role is carried out by the Bankruptcy Administration and Investigations (BAI) team on behalf of the Accountant.

In terms of Section 50(3) of the Act trustees are required to make a report to the Accountant if they have reasonable grounds to suspect an offence has been committed by a debtor, or by anyone else in their dealings with the debtor.

A list of typical offences is shown at Appendix R.

18.6.1 Considerations

Any suspicion of serious offences must be submitted without delay to the Accountant for consideration.

Before making a report the Accountant requests that documents requesting co-operation and providing the implications of not co-operating are personally served on the debtor. Handing documents to a person other than the debtor, or leaving at an address where they are believed to reside, is not personal service. This may require more than one visit by Sheriff Officers. Failure to effect personal service means a debtor can later deny receipt of documents or correspondence, even when these were handed to another member of their household or posted through their letterbox.

Information that a suspected offence report has been submitted should not be disclosed to a debtor.

However, a trustee must ensure that the debtor has been made fully aware of, and understands, their responsibilities, in particular:

  • a Statement of Assets and Liabilities should be signed and witnessed
  • records must be kept of all actions taken and enquiries made
  • the debtor must have been given a reasonable period of time to comply with their responsibilities
  • any important documentation has been personally served on the debtor by a sheriff officer

The Crown Office and police have asked, before submitting a report to them, the Accountant considers the following criteria:

  • sufficient evidence has been enclosed with the report to merit investigation by the police
  • all courses of civil action have been exhausted
  • prosecution of the debtor (or any other person) will have a significant impact on the administration of the bankruptcy

The police have provided suggested minimum standards of enquiry to assist trustees and the Accountant when considering whether they have reasonable grounds to suspect an offence. These are shown at Appendix S.

18.6.2 Making an application

The report should be made using the Suspected Offence Referral Application. 

Trustees should note the following:

  • it is not deemed acceptable to assume there are reasonable grounds
  • when there is a potential criminal offence by the debtor it is essential all matters are pursued and reported promptly
  • a report not be submitted if the whereabouts of the debtor have not been confirmed
  • a report should not be submitted as a means to secure the debtor’s co-operation. There are alternative civil routes to obtain co-operation or information
  • the trustee must provide evidence to show the debtor is aware of their legal obligations and they are aware of the implication of failing to comply with their obligations

18.6.3 Actions of the BAI team

The BAI team will consider all reports against guidelines provided by the Crown Office and the police.

When they are satisfied there are both reasonable grounds to suspect an offence has been committed and the information provided conforms to the guidance, the report will be forwarded to the Crown Office for investigation and possible prosecution action.

The trustee will be notified of the decision and provided any reasons for rejection.

18.6.4 Actions of the Crown Office

When considering a report the Crown Office must have regard to the implications of the European Convention of Human Rights (ECHR). In terms of Article 6 the question of within a reasonable time is paramount.

The date from which unreasonable delay is considered is the date on which it became known to the potential accused they may well be the subject of a criminal prosecution. What is described in ECHR case law as a period of inactivity is likely to result in the Crown Office not pursuing a case.

An example of a period of inactivity is when a trustee took no action to pursue a debtor for a period of eight months after they had failed to comply with the trustee’s instruction.

18.6.5 Further actions of the trustee

If there is any change to a debtor’s circumstances that may impact on a submitted report this must be brought to the attention of the BAI team with a recommendation as to what action should be taken.

The trustee should note following submission of a report the Accountant, or the police, may request:

  • a statement from the trustee and/or their staff regarding the circumstances leading up to the submission of the report
  • original, or copies, of documents that support or evidence the suspected offence

The Procurator Fiscal may wish additional information regarding the case which may be used to influence the sentence imposed.

Information that would be useful may include:

  • whether the offence is a technical one
  • whether there is any criminal element involved
  • whether the debtor is now co-operating with the trustee
  • whether there has been any quantifiable loss to creditors for which a compensation order might be the most appropriate disposal for the case. Quantifiable loss to the estate should be recorded in Part III of the report

18.6.6 Outcome

The Accountant will liaise with the Crown Office and monitor the outcome of suspected offence reports and may issue press releases to give publicity to successful prosecutions.

Information regarding successful prosecutions may also be placed on the AiB website.

It is hoped these reports may act as deterrents to future potential offenders. Reference in general terms to successful prosecutions can be used in letters to debtors when notifying them they may be committing an offence.

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