Failure to Prevent Fraud Offence: Guidance and Size Test

The failure to prevent fraud offence is a corporate crime that applies only to large organisations, defined by a size test on turnover, assets and staff. This guide covers what the offence is, who it applies to, and the reasonable procedures defence, alongside our failure to prevent fraud guidance summary and a size test below. This is general awareness information, not legal advice, stated as at September 2026 and last reviewed 24 September 2026.

What the failure to prevent fraud offence is

The offence is in section 199 of the Economic Crime and Corporate Transparency Act 2023 and came into force on 1 September 2025 (SI 2025/349) (legislation.gov.uk). It applies only to large organisations, as defined by the size test below.

Failure to prevent fraud guidance

The Home Office published statutory guidance on 6 November 2024. It sets out six principles an organisation’s procedures should follow: top-level commitment, risk assessment, proportionate risk-based prevention procedures, due diligence, communication (including training), and monitoring and review. The defence to the offence is that the organisation had reasonable procedures in place, proved on the balance of probabilities, or that it was not reasonable to expect it to have any.

The size test

Under section 201 of the Economic Crime and Corporate Transparency Act 2023 (legislation.gov.uk), a body is a large organisation only if it met two or more of these conditions in the financial year before the year of the fraud offence: turnover more than £36 million; balance sheet total (total assets) more than £18 million; average number of employees more than 250. “More than” is strict, so exactly 250 employees does not meet that condition. Employee numbers are the monthly average across the financial year, and turnover is adjusted proportionately if the financial year is not twelve months.

If your organisation is the parent of a group, section 202 (legislation.gov.uk) assesses you on your whole group’s aggregate figures instead: aggregate turnover more than £36 million net, or £43.2 million gross; aggregate balance sheet total more than £18 million net, or £21.6 million gross; aggregate employees more than 250.

The offence and the hub, and how they differ

This page covers the corporate criminal offence and who it applies to. Our Fraud Prevention hub covers something different: day-to-day fraud recognition training by role, for every employee, regardless of whether your organisation meets the size test. Many organisations use both: the corporate offence is about your organisation’s own liability, and role training is about your people spotting fraud aimed at them or your customers.

Train your team on this

Failure to Prevent Fraud: The UK’s New Corporate Crime covers the offence, the size test and the six principles in more depth, for the people in your organisation who need to act on this. See the course. It sits within our governance and compliance courses.

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