UK Supreme Court's landmark judgment in Bilta v Tradition Financial Services

On 7 May 2025, the UK Supreme Court delivered a significant judgment in the case of Bilta (UK) Ltd (in liquidation) and others v Tradition Financial Services Ltd. The decision — which involved complex issues of fraudulent trading and dishonest assistance — is a significant step in the right direction in the fight against ever-increasing corporate fraud. 

Here, experienced insolvency lawyer Jennifer Lockhart provides an overview of the judgment and its implications.

Missing trader intra-community (MTIC) fraud 

The case revolves around a missing trader intra-community (MTIC) fraud specifically concerning fraudulent VAT trading in carbon credits (EUAs). 

Bilta and other claimant companies (Weston Trading UK Ltd, Nathanael Eurl Ltd, Vehement Solutions Ltd, and Inline Trading Ltd) — all now in liquidation — participated in these fraudulent activities, resulting in substantial VAT liabilities to HM Revenue and Customs (HMRC). 

Tradition was alleged to have dishonestly assisted the fraudulent activities by facilitating trades despite knowing that the nature and pattern of trading was suspicious and potentially illegitimate 

Two key legal issues

The Supreme Court addressed two primary legal questions:

1. Scope of Section 213 of the Insolvency Act 1986 — whether liability for fraudulent trading under this section is limited only to individuals managing or controlling the company.

2. Statute of Limitations — whether certain claims of dissolved and subsequently restored companies were time-barred by the statute of limitations under section 32 of the Limitation Act 1980. It raises a question of how the test in section 32(1) of the Limitation Act 1980 (whether the claimant could with reasonable diligence have discovered the fraud, concealment or mistake) operates during the period of a company’s dissolution.

Findings of the Supreme Court

On Section 213 (Fraudulent Trading)

The Supreme Court unanimously rejected Tradition's argument that section 213 liability should be confined to those exercising managerial or controlling roles.

It confirmed that liability under section 213 of the Insolvency Act 1986 extends to external parties who knowingly participate or facilitate fraudulent trading, even if not managing or controlling the company.

Therefore, Tradition — despite not controlling or directly managing the fraudulent companies — could still be liable under section 213.

On the Statute of Limitations (Dishonest Assistance)

The Court considered whether claims brought by Nathanael and Inline (both companies dissolved and later restored) against Tradition for dishonest assistance were statute-barred.

The key question was whether these companies (during the period in which they were dissolved) could have reasonably discovered the fraud, thereby starting the clock on the limitation period.

The Supreme Court concluded that the claimant companies had failed to demonstrate they couldn’t (with reasonable diligence) have discovered the fraud. The Court affirmed that the burden of proof fell on the claimants and that this burden hadn’t been met. Therefore, their claims for dishonest assistance were statute-barred.

Final decision

The Supreme Court dismissed both appeals:

• Tradition's appeal on the scope of section 213 was dismissed, expanding potential liability under fraudulent trading beyond managerial insiders.
• Appeals by Nathanael and Inline regarding the statute of limitations were also dismissed, affirming that their claims of dishonest assistance were statute-barred.

Implications of the judgment

This ruling broadens the scope of liability for fraudulent trading under insolvency law, impacting external participants in fraudulent schemes. It also clarifies the burden of proof and the applicability of statutory limitation provisions, particularly relating to companies restored after dissolution.

The judgment provides significant clarity regarding the interpretation of fraudulent trading provisions and the statute of limitations in the context of company dissolution and restoration.

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