The Insolvency Act, Section by Section | Part 4 | Section 209
The books tell an awkward story. What happens if someone edits it?
For directors and shareholders tempted to tidy the record once liquidation has begun.
Section 209 in plain English
Section 206 already punishes tampering with records in the year before a company fails. Section 209 picks up the same theme from the other side of the line. Once a company is being wound up, interfering with its books, papers or securities becomes a standalone offence, and it is committed with intent to defraud or deceive any person.
The section names its acts precisely, and each one is a different way of making the record lie.
Destroying
Books, papers or securities of the company put beyond recovery, whether shredded, deleted or simply made to disappear.
Mutilating
Records damaged or made partly unreadable, so the surviving fragments no longer tell the whole story.
Altering
Existing entries changed after the event: dates moved, figures adjusted, names substituted.
Falsifying
Records made to show things that never happened, from invented invoices to fabricated correspondence.
False or fraudulent entries
Making, or being privy to the making of, any false or fraudulent entry in a register, book of account or document belonging to the company.
Where section 209 operates
The section applies while the company is being wound up. The year before belongs to the records limbs of section 206.
Who the section catches
Here section 209 breaks the pattern of its neighbours. The offence can be committed by any officer of the company, past or present, and also by any contributory. A contributory is a person liable to contribute to the company’s assets on winding up, which in most companies means the members. In plain terms, shareholders are inside this section.
What has to be proved, and by whom
The second break from the pattern is the one that matters most in the courtroom. Sections 206, 207 and 208 each prove the act and then hand the accused a defence to establish. Section 209 works the way most people assume all criminal law works: the prosecution carries the whole burden, including the state of mind.
A book, paper or security destroyed, mutilated, altered or falsified, or a false entry made in the company’s records.
The act was done with intent to defraud or deceive any person. Intent stays on the prosecution throughout.
Audit trails, metadata, versions and timing usually answer both questions together.
Genuine corrections, honest tidying and routine record-keeping, done openly and documented, fall outside the section.
Edits that consistently favour the person making them, done quietly after the winding up began, prove themselves.
The comfort in that structure is real but narrow. Modern records rarely leave the intent question open. Cloud accounting platforms log every change with a user, a timestamp and a before-and-after. Deleted files leave traces. A pattern of edits that all point the same way makes the prosecution’s second step for them.
What a conviction costs
Section 209 is a criminal offence triable in either court, carrying a custodial maximum and an unlimited fine on indictment. Interference with records during a live insolvency process is treated as an attack on the process itself, and sentencing reflects that.
Falsification aimed at deceiving a liquidator or the court sits at the serious end of the range.
A records offence during a winding up is powerful material in disqualification proceedings.
A proven false entry undermines the director’s credibility in each civil claim the liquidator brings, on any subject.
Bank records, counterparties and filed returns reconstruct what the falsified record was hiding. The edit adds an offence without removing the problem.
The answer is never to change them. What the record means, and how it should be explained, is where advice earns its keep. Femi has spent thirty years on both sides of these questions, inside HMRC and advising clients across tax and insolvency.
Book a Free 30 Minute CallStaying clear of the section
Because intent is the heart of the offence, the safe course is the one that leaves intent beyond question. Records with problems in them are a manageable situation. The management happens in the open.
Handling imperfect records the safe way
- Freeze the record as it stands the moment winding up begins. No tidying, no corrections, no deletions.
- If an entry is wrong, say so in a memo to the liquidator rather than amending the entry itself.
- Preserve access logs, backups and prior versions, and volunteer them.
- Keep every credential to accounting platforms intact and hand them over as found.
- Warn family members and shareholders with access that the freeze applies to them too.
- Take advice before responding to anything the records appear to show.
The HMRC angle
Falsified company records have a structural weakness in HMRC-driven liquidations: the true figures were usually filed with HMRC long before anyone thought of changing them. Making Tax Digital keeps VAT records flowing to HMRC quarter by quarter. Real time information does the same for payroll. A ledger edited during the winding up ends up contradicting the company’s own filings, and the contradiction is dated.
Femi’s practice sits directly on this ground. Eight years inside HMRC, fifteen years representing clients as a tax adviser at KPMG, Deloitte and Grant Thornton, and a further fifteen years as a solicitor acting for clients in the insolvency space. Examiners are trained to look for exactly the patterns that panicked editing produces: sequences that skip, entries that favour one person, versions that disagree. Knowing how the record will be read is most of knowing how to handle it.
A worked example
Take a composite scenario, drawn from common patterns rather than any client matter. Two companies in liquidation each have a director loan account showing substantial sums owed back to the company. Both directors know the liquidator will pursue the balance.
Rewrites the ledger
- Logs into the cloud accounting platform three weeks after the winding-up order.
- Reclassifies a year of drawings as expense reimbursements and backdates a credit note.
- The platform’s audit trail records every change: user, date, time, before and after.
- The edited figures also contradict the company’s own filed returns.
- The intent question answers itself: every change favoured him, and every change came after the order.
- Section 209 exposure on top of the loan account claim, which survives untouched.
Annotates instead
- Leaves the ledger exactly as it stood on the day of the order.
- Writes to the liquidator identifying two entries he believes were misposted, with the invoices attached.
- Hands over the platform login and points out where the audit trail lives.
- The loan account claim proceeds, and is negotiated on the true figures.
- His credibility holds through every later conversation.
- No section 209 exposure of any kind.
Related sections and where to go next
Section 209 completes the records picture that runs through Part 1. Section 206 covers tampering in the twelve months before winding up, section 208 obliges directors to deliver the records up and never obstruct them, and this section punishes changing what they say. The next article turns to section 210 and material omissions from the statement of affairs, where the record at issue is the one the director creates for the liquidation itself. Section 207 completes the set on the transactions side.
If a winding-up petition or a liquidator’s inquiry is already part of your situation, the practical guides in The Director’s Insolvency Survival Guide cover the urgent ground, including what happens when directors come under investigation.
And if the company’s records are keeping you awake, bring the worry to a professional before you bring anything to the ledger.
A confidential 30 minute call with Femi O. Ogunshakin, Solicitor, Tax Adviser and Former HMRC Inspector.
Book a Free Call