Director Disqualification for technical matters

Case 1 – Director Disqualification for failing to submit accurate tax returns

Director Disqualified for 5 years by a signed undertaking of the director.

From 1 April 2015 onwards the director disqualified failed to ensure that the failed company submitted accurate returns to HM Revenue & Customs (HMRC) in respect of Value Added Tax (VAT). As a result, HMRC have raised assessments of £173,498 which remain unpaid at liquidation.

• The disqualified director was the sole appointed director of the company.
• The disqualified director notified HMRC of the Failed Company liability to register for VAT effective from 1 September 2015.
• the failed company submitted VAT returns and payments to HMRC for the periods 06/16 to 12/17. VAT repayment returns were submitted for the periods 12/15, 03/16 and 03/17
• On 18 September 2017 HMRC wrote to the banned director stating based on credit card takings alone, the VAT threshold had been exceeded in May 2015 and they would be putting his VAT registration back. As assessment was raised for the period 06/15 to 12/16 of £17,838. On 29 January 2018 HMRC made an unannounced visit to carry out an examination of the company till and extract data.
• On 7 February 2018 HMRC notified the banned director that they had assessed the amount of VAT due for periods 12/15 to 12/16 to be £96,789.
• On 25 May 2018 HMRC notified the disqualified director that the failed company should have been registered for VAT from 1 April 2015.
• On 18 June 2018 HMRC notified The Director that they had assessed the amount of VAT due for periods 03/17 to 03/18 to be £86,844.
• On 4 November 2018, following a request from the failed company agents, HMRC commissioned an independent statutory review.
• On 1 February 2019 the review concluded that the effective date for registration was upheld, the assessments raised for the period 1 April 2015 to 31 August 2015 had been reduced by £10,135 to allow the failed company to complete a VAT return; all other assessments were upheld.
• In April 2019 the director supplied till rolls to HMRC. On 26 June 2019 HMRC wrote to the director to advise that the till rolls had been examined and did not, in their opinion, represent credible evidence. They reissued the VAT assessments and gave the failed company 30 days to appeal to an independent tribunal. the Failed Company did not apply for Tribunal Appeal.
• the failed company made one payment of £3,919 against the notified liability of £173,498 and £169,579 remained outstanding as at the date of Liquidation.

On 5 August 2020 the Failed Company entered liquidation. HMRC has submitted a claim for £753,597 which includes VAT and surcharges of £178,844, CT of £273,563 for 2015 to 2017, penalties of £271,396 and additional interest of £29,794.

Case 2 – Director Disqualification for abrogating company director responsibilities and taking no active role in the business

Director Disqualified for 3 years by an undertaking agreed by the director.

From 27 March 2019 when appointed as a director, the director disqualified abrogated his responsibilities as a director of the insolvent company by failing to ascertain or keep himself informed about the insolvent company and its financial position and activities, and by taking no active role in controlling or supervising its affairs:

• The filed company stated nature of business was as a building completion and finishing company.
• The failed company entered creditor’s voluntary liquidation on 02 December 2020.
• By failing to exercise diligence required of a director in that the banned director facilitated the opening of a company bank account in the insolvent company name on 17 June 2019 but then failed to exercise due diligence, caused or allowed a 3rd party to control the financial affairs of the insolvent company and as a result;
• Failed to ensure adequate corporate financial governance and report suspicious financial activity.
• Failed to prevent the filing of amended false accounts at Companies House on 23 July 2019 for year end 31 December 2018, a period when the insolvent company was confirmed as being a dormant company, yet the accounts show a turnover of £831,058 with a gross profit of £250,420.
• Has allowed payments of £69,119 to an unconnected company.
• Has allowed £105,210 payments to an unknown personal bank account.
• Allowed Job retention scheme payments totalling £11,205 from five unconnected companies to be paid into the bank account and not declare the overpayments to HMRC.
• Failed to substantiate whether the trading activities of the failed company were legitimate and in doing so failed to ascertain that the only source of income for the the insolvent company comprised solely of 5 loans totalling £150,799 and non-trading receipts totalling £126,730.

Failed to ensure the accounting books and records for the insolvent company were maintained, preserved and delivered up to the Liquidator, consequently it is impossible to;

• Explain the deficiency of £294,335.
• Ascertain whether purchases acquired from trade creditors totalling £155,235 were used for the benefit of the failed company, and,
• Ascertain whether the insolvent company was entitled to obtain the Business Bounce Back Loan of £15,000 received on 5th May 2020 and in such an event if those funds were used for the benefit of the insolvent company.

Case 3 – Director Disqualification for SIPP and pension offences.

Director Disqualified for 9 years by Order of the Court.

Between approximately June 2014 and July 2015 the director disqualified failed to ensure that the liquidated company properly advised its clients on the transfer of their existing pensions into Self-Invested Personal Pensions (SIPPs), resulting in the Financial Service Compensation Scheme (FSCS) paying compensation totalling at least £1,839,883 to 325 clients:

• the liquidated company failed to clearly notify clients of the risk elements, full details of the captive insurance policy providing the ‘Capital Guarantee’ said to be offered by the recommended product and the timescales for early redemption.
• the liquidated company failed to ensure the suitability of the product including the underlying investment for their clients.
• the liquidated company disregarded the potential conflict of interest caused by the involvement of a third party in the design of the sales and advice process employed by the liquidated company, despite this party having a clear and significant financial interest in the outcome of the advice given to its clients.
• allowed a third party, an individual without the required authority from the regulator, to act as a director of the liquidated company.
• thereby exposed the liquidated company to the risk of disciplinary action from the regulator and financial claims from clients.

Case 4 – Director Disqualification the Housing Act 2004 tenancy deposit offences

Director Disqualified for 6 years by a director signed undertaking.

The director disqualified caused the failed company to fail to comply with its statutory obligations under provisions of the Housing Act 2004 to properly secure tenancy deposits taken on behalf of landlords resulting in losses to creditors of at least £43,161;

• The liquidator has received claims from landlords in respect of deposits that had failed to be secured by depositing in an approved Deposit Protection Scheme (DPS) in respect of 64 tenancies between 01 May 2013 and liquidation resulting to losses to creditors of £43,161;
• Additionally, as at 25 February 2020 at least 406 properties were being manged by the liquidated company, of which 205 do not appear to have a deposit registered with a DPS.

Case 5 – Director Disqualification for inaccurate VAT information

Director Disqualified for 6 years by Court Order.

The director disqualified caused the liquidated company to submit inaccurate Value Added Tax (VAT) returns to HM Revenue & Customs (HMRC), under-declaring VAT in the estimated sum of £154,136 in respect of the VAT quarters February 2016 to May 2019.

• Further, you aggravated the under-declaration by failing to provide information and documents required by HMRC under the Finance Act 2008 and effecting payments to other parties, with £95,324 being paid out of the company’s bank account in the period after notification of the assessed VAT liability on 10 April 2019, of which only £100 was paid to HMRC. In particular:
• The liquidated company registered for VAT on 07 February 2016 with the effective date of registration to commence from 01 February 2016.
• The liquidated company submitted VAT returns for the quarters February 2016 to August 2017, and February 2018 to February 2019 disclosing a total liability of £3,449. No returns were submitted for the VAT quarters November 2017 and May 2019, in respect of which HMRC initially raised automated assessments in the sum of £1,453. A repayment claim submitted by the company in respect of the VAT quarter May 2018 was rejected by HMRC. Over the period 28 April 2016 to 20 December 2018 the sum of £3,577 was paid by the company leaving a balance of £1,325.
• On 21 August 2018, HMRC arranged to inspect the company’s VAT and other accounting records on 20 September 2018. This appointment was cancelled by the banned director on the day, re-arranged to 19 October 2018, again cancelled by the director on the day, and then re-arranged to 13 November 2018.
• At the visit on 13 November 2018 the required VAT and other accounting records necessary to verify the accuracy of VAT returns were not made available.
• On 16 November 2018 HMRC issued a notice under paragraph 1 of Schedule 36 of the Finance Act 2008 to provide information and produce documents by 21 December 2018. The company failed to comply and on 10 January 2019 was issued with a £300 penalty notice and a requirement to provide the requisite information by 19 February 2019. The company continued to fail to comply and by 28 February 2019 the penalty had reached £2,940.
• On 10 April 2019, in the absence of compliance, HMRC advised the company that it would be disallowing input tax for the stated period and raising an assessment of tax in the sum of £232,628. The company had until 26 April 2019 to provide further information.
• On 23 April 2019, the company accountant provided HMRC with a copy of bank statements covering the period 01 December 2017 to 31 December 2018, which was insufficient to comply with HMRC requirements.
• On 24 April 2019 you sought professional advice from an Insolvency Practitioner whom she advised that the only company creditor was HMRC, in the sum of circa £232,000, and that the liquidated company had no stock.
• On 26 July 2019 HMRC wrote to the liquidated company advising that following receipt of the limited information provided a revised schedule of the VAT liability assessments for the quarters February 2016 to May 2019 had been produced in the sum of £169,223. This was subsequently revised to £162,038 comprising £154,136 under-declared VAT and £7,902 penalties and interest. No payments were made against this liability by the liquidated company.

Case 5 – Director Disqualification for not maintaining or delivering up accounting records

Director Disqualified for 6 years by a director signed undertaking.

Between 13 January 2017 and 08 May 2018, the date he resigned, the disqualified director failed to maintain, preserve and, or in the alternative deliver up complete accounting records as maintained of the liquidated company, so that it has not been possible to:

•  Establish who and why 76 unknown payments totalling £349,774.62 were made out of the company bank account between 9 October 2017 and 24 November 2017;
•  Establish who and why 34 deposits totalling £352,100.00 were made into the company bank account between 9 October 2017 and 23 November 2017;
•  Verify the turnover of the liquidated company and that all earnings were accounted for correctly;
•  Establish why payments totalling £1600.00 were made to him in October 2017 from the company bank account;
•  Establish whether the company had employees and whether their taxes and national insurance had been accurately accounted for and collected
•  Confirm details of all trade suppliers and therefore the true value of trade creditors;
•  Establish the true amount outstanding to HM Revenue and Customs in respect of both VAT, PAYE/NIC and CT
•  Furthermore, it has not been possible for the Liquidator to establish whether the liquidated company had any goodwill or assets that may be realised for the benefit of creditors.

Case 6 – Director Disqualification for The Immigration, Asylum and Nationality Act 2006 offences

Director Disqualified for 6 years by a signed undertaking of the director.

The director disqualified breached his duties as a director of the failed company by failing to ensure that it complied with legislative requirements in that:

•  the failed company did not comply with its statutory obligations under The Immigration, Asylum and Nationality Act 2006 resulting in the employment of 2 people who did not have the right to work.
•  Following a visit from Home Office Immigration Officers on 31 August 2021 during which this breach was discovered, the failed company was issued with a penalty notice in the sum of £30,000, reduced to £20,000 on 20 January 2022, which remains unpaid
•  He was in office as a director of the company at the time of the Home Office visit.

Case 7 – Director Disqualification for The Immigration, Asylum and Nationality Act 2006 offences

Director Disqualified for 5 years by Order at trial.

The director disqualified breached his duties as a director of the insolvent company by failing to ensure that it complied with legislative requirements in that:

• The insolvent company did not comply with its statutory obligations under The Immigration, Asylum and Nationality Act 2006 by employing 2 people who did not have the right to work.
• Following a visit from Home Office Immigration Officer on 2 March 2020 during which this breach was discovered, The Insolvent Company was issued with a penalty notice in the sum of £30,000, which remains unpaid
• The banned director was the only director of the company at the time of the Home Office visit.

Case 8 – Director Disqualification for not registering for VAT

Director Disqualified for 11 years by an undertaking agreed by the director.

Between 01 January 2016 and 01 August 2020, the disqualified director failed to comply with statutory obligations by failing to register the dissolved company for Value Added Tax (VAT), when he knew or ought to have known that turnover had exceeded the VAT threshold, resulting in losses totalling £104,897 inclusive of penalties to Her Majesties Revenue and Customs (HMRC);

•  The dissolved company traded as a takeaway between February 2015 and August 2020,
•  The dissolved company generated sales from both online and walk in customers,
•  He incorporated Company 2 (C2) on the 20 January 2016 to receive the sales generated through online food intermediaries,
•  Following an investigation HMRC determined dissolved company and C2 were a single trading entity and that income had exceeded the VAT threshold and dissolved company ought to have registered for VAT from 1 January 2016,
•  HMRC registered dissolved company for VAT from 01 January 2016 resulting in an officer’s VAT assessment being raised on the 26 March 2021 totalling £104,897, excluding penalties and interest,

 The dissolved company entered liquidation on 20 May 2021 with liabilities totalling at least £147,550 in respect of VAT including penalties.

Case 9 – Director Disqualification for The Immigration, Asylum and Nationality Act 2006 offences

Director Disqualified for 11 years by a director signed undertaking.

The director disqualified breached his duties as a director of the insolvent company by failing to ensure that it complied with legislative requirements in that:

• The insolvent company did not comply with its statutory obligations under The Immigration, Asylum and Nationality Act 2006 by employing 4 people who did not have the right to work
•  Following a visit from Home Office Immigration Officers on 16 September 2021, during which this breach was discovered, The Insolvent Company was issued with a penalty notice in the sum of £60,000, which remains unpaid
•  He was the appointed director of the company at the time of the Home Office visit.

Case 10 – Director Disqualification for acting as a director whilst being banned

Director Disqualified for 4 years by a director signed undertaking.

During the period 11 September 2017 to 11 April 2018 the company director abrogated his responsibilities as a director of the dissolved company in that:

•  He allowed an unappointed individual to act as a director of the dissolved company even though that individual was not registered at Companies House. The unappointed individual was also banned from acting as a director of a limited company from 19 May 2014 for a period of five years.
•  Despite only being registered at Companies House as a director from 21 February 2014 until 25 March 2014 and from 11 September 2017 onwards he was the sole signatory on the bank account.
•  He caused cash withdrawals to be made from the dissolved company’s bank account between 01 March 2016 and 11 April 2018 totalling £200,688. This was at a time when the dissolved company became balance sheet insolvent and no supporting evidence has been provided to satisfactorily explain what this money was used for.
•  He has not provided an explanation for the sum of £31,631 which was transferred to his personal bank account during the period 19 July 2017 to 09 February 2018.
•  During the period 11 September 2017 and 11 April 2018, He allowed payments of at least £21,285 to be made on behalf of the unappointed individual, which were not related to the running of the dissolved company.

Case 11 – Director Disqualification for not maintaining or delivering up books and records

Director Disqualified for 6 years by Court Order.

The banned director failed to ensure that the failed company maintained and/or preserved adequate records or, in the alternative, she has failed to deliver up any or sufficient accounting records to explain the failed company’s financial affairs for the period from its last accounts, 31 December 2017 to its liquidation on 16 April 2020. In that:

• the failed company was incorporated in December 2012 and its last accounts filed were to the director 2017;
• Although as these accounts state that they were approved and signed before the end of the accounting period, their accuracy is in doubt;
• No books and records have been delivered up in the liquidation;
• Without records it has not been possible to:
• account for expenditure from the bank account of at least £305,987 from 01 January 2018, of which
• £80,300 was withdrawn in cash;
• £79,852 was paid to connected third parties;
• £49,573 was paid to The Director;
• verify that all monies paid were legitimate company expenditure and confirm that all creditors have been disclosed in the liquidation;
• ascertain the nature of the payments made to the banned director and how these have been accounted for to HM Revenue & Customs (‘HMRC’);
• verify the basis for PAYE/NIC/CIS assessments raised by HMRC for the tax years 2015/16 to 2018/19.
• establish the true amount of VAT due to HMRC and determine whether the assessments raised are reasonable;
• The director failed to ensure that CIS deductions were made from sub-contractors used by DC and that these were paid to HMRC as required. Consequently HMRC raised assessments for a total of £442,050 for CIS which should have been deducted for the tax years 2015/16 to 2018/19.
• HMRC also levied a penalty of £76,253.

Case 12 – Director Disqualification for breaches of the Health and Social Act (Regulated Activities) Regulations 2014 (HSCA)

Director Disqualified for 6 years by a director signed undertaking.

The disqualified director failed to ensure that the liquidated company failed to comply with the Health and Social Act (Regulated Activities) Regulations 2014 (HSCA) with the result that the Care Quality Commission (CQC) identified breaches of the HSCA. The CQC raised their concerns about fire safety and risk to the Lincolnshire Fire and Rescue Service who carried out an inspection and issued a Prohibition Notice on 10 September 2021 requiring the liquidated company to prohibit anyone from sleeping overnight or using the premises as a residence. The company entered liquidation on 12 October 2021.

• The liquidated company operated a residential care home providing personal and nursing care.
• The CQC carried out an unannounced inspection of the liquidated company’s premises on 08 and 13 September 2021 and found that the care home operated by the liquidated company was inadequate and had breached the HSCA by:
• Failing to ensure that people were protected from avoidable harm.
• Failing to ensure that staffing numbers were sufficient to meet peoples needs or keep them safe.
• Failing to ensure that staff had the skills and support they required.
• On 10 September 2021, following an inspection of the care home, Lincolnshire Fire and Rescue Service issued a Prohibition Notice requiring the liquidated company to prohibit anyone from sleeping overnight or using the premises as a residence until matters had been remedied. The local authority then took steps to protect residents in alternative facilities.
• As a result of its findings the CQC notified the liquidated company’s their intention to cancel their CQC registration. The banned director sought advice and the company ceased trading on 16 September 2021 and entered liquidation on 12 October 2021.

Case 13 – Director Disqualification for entering in to fraudulent company transactions

Director Disqualified for 10 years by Order at trial.

In the period between April 2006 and June 2006, The Company Director caused or allowed The Dissolved Company to participate in transactions, which were connected with the fraudulent evasion of Value Added Tax (VAT), such connections being something which The Company Director knew or ought to have known about.

The Company Director caused or allowed The Dissolved Company to claim wrongfully the sum of £2,871,661 from HMRC over a three month period from April 2006 to June 2006.

Case 14 – Director Disqualification for offences under The Immigration, Asylum and Nationality Act 2006 Act

Director Disqualified for 4 years by a signed undertaking of the director.

The Director Disqualified breached his duties as a director of The Insolvent Company by failing to ensure that it complied with legislative requirements in that:

• The Insolvent Company did not comply with its statutory obligations under The Immigration, Asylum and Nationality Act 2006 by employing 3 people who did not have the right to work
• Following a visit from Home Office Immigration Officers on 10 December 2021, during which this breach was discovered, The Insolvent Company was issued with a penalty notice in the sum of £30,000 which remains unpaid

The Disqualified Director was in office as a director of the company at the time of the Home Office visit.

Case 15 – Director Disqualification for HMRC offences not paying VAT and PAYE

Director Disqualified for 3 years by an undertaking agreed by the director.

The Banned Director failed to ensure that the Company complied with its statutory obligations to file returns and/or make corresponding payments to HMRC and caused the Company to trade to the detriment of HMRC in respect of (i) Value Added Tax (VAT) from no later than 10 May 2016; (ii) Corporation Tax (CT) accrued from 2015/2016 to the liquidation of the Company; (iii) Pay as you Earn (PAYE) and Construction Industry Scheme (CIS) liabilities and penalties owed from 2016/2017 to the liquidation of the Company, in that:

VAT

• VAT liabilities totalling £163,639.47 are outstanding in respect of seven returns and three assessments for the periods 07/15 to 04/18 including charges / penalties totalling £17,209.75.

Corporation Tax

• Corporation tax liabilities are outstanding in the amount of £10,151.85 for the year ended 2015/2016.

PAYE / CIS

• PAYE and CIS liabilities and penalties owed from 2016/2017 to the liquidation of the Company amounted to £94,969.13.
• At cessation of trade HMRC was the Company’s majority creditor with debts totalling £369,112.95;

During the period 10 May 2016 to the liquidation of the Company, the sum of £1,107,646.31 was paid from the Company’s bank account of which the sum of £26,571.59 was paid to HMRC. Of the sums paid from the Company’s bank account:-

• Staff were paid £461,107.49;
• Trade creditors were paid £388,033.03;
• The Banned Director was paid £185,445; and
• ATM withdrawals amounted to £42,693.25.

Case 16 – Director Disqualification for not filing returns at HMRC

Director Disqualified for 5 years by a director signed undertaking.

The Company Director failed to ensure that The Insolvent Company complied with its statutory obligations to file returns to HM Revenue & Customs as and when due in respect of Value Added Tax (VAT) for the period ended 30 September 2014 onwards. On 14 March 2019 HMRC notified The Insolvent Company of the intention to carry out a VAT inspection of the company’s records. The requested company records were not made available to HMRC and as a result HMRC raised an assessment in the sum of £340,527 (Including interest) for the period 09/14 to 03/19;

• The Insolvent Company was registered for VAT with effect from 01 June 2011;
• The Company Director failed to ensure that any returns were submitted to HMRC in respect of the liability for VAT for the period 30 September 2014 onwards and instead paid the liability as stated in the assessments raised by HMRC;
• On 15 March 2019 HMRC made arrangements to carry out a check of The Insolvent Company’s VAT records on 21 May 2019. The appointment was re-scheduled for 27 June 2019, but because of The Company Director’s illness and the inability to provide the necessary records this appointment was also cancelled;
• On 28 June 2019 HMRC issued a Notice to provide information and produce documents giving The Insolvent Company 30 days to produce the information required by HMRC. The Insolvent Company entered liquidation on 11 July 2019, not having provided HMRC with the information it had requested;
• HMRC raised an assessment in the sum of £326,324 (plus interest of £14,203) for the period 09/14 to 03/19;

HMRC has submitted a claim in liquidation in respect of VAT in the sum of £424,082 (Including surcharges and interest), of which £386,755 fell due prior to the liquidation.

Case 17 – Director Disqualification for not filing VAT returns at HMRC

Director Disqualified for 5 years by a signed undertaking of the director.

The Company Director failed to ensure that The Insolvent Company complied with its statutory obligations to file returns and pay the liabilities disclosed to HM Revenue and Customs (HMRC) in respect of Value Added Tax (VAT) from September 2017 until the date of liquidation on 06 March 2020 resulting in estimated liabilities due to HMRC totalling £92,591.94 (inclusive of interest). In that:

•  A total liability was incurred resulting in a claim of £92,591.94 by HMRC in the Liquidation.
•  A VAT liability was incurred for the quarters ending September 2017 to April 2019 resulting in a winding-up petition being presented to Court by HMRC for £73,253.68.
•  The Company failed to file VAT returns from incorporation on 06 September 2017 to liquidation on 06 March 2020 consequently HMRC have raised assessments and penalties from 06 September 2017.
•  The bank statements for the period from 10 October 2017 to 24 December 2018 show payments from the Company’s bank account total £90,259.66 of which £Nil was paid to HMRC.
•  The Company was wound-up by the Court on the petition of HMRC on 06 March 2020.

At liquidation the Company had total liabilities of £93,588.96 of which £92,591.94 is due to HMRC.

Case 18 – Director Disqualification for false Corporation Tax returns

Director Disqualified for 7 years by a signed undertaking of the director / an undertaking agreed by the director / a director signed undertaking.

The Director Disqualified failed to ensure that The Liquidated Company’s Ltd (‘LC’) recorded all sales made and as a consequence caused false Corporation Tax (‘CT’) returns to be submitted to HM Revenue & Customs (‘HMRC’). He further failed to register LC for VAT when its income had exceeded the threshold for registration and therefore did not account to HMRC for VAT due from its incorporation in October 2012 to its cessation in March 2019. HMRC’s claim in the liquidation totals £434,074. In that:

•  HMRC commenced an investigation into CT returns submitted by LC in July 2015;
•  After investigation it was found that LC records of sales were inadequate and that cash receipts had been paid into his personal bank account without being recorded or declared to HMRC;
•  HMRC concluded that turnover had been under-reported and assessments were raised for additional CT due, totalling £84,917 for the periods ended 9 October 2013 to 31 October 2017.
• After allocation of payments made, CT of £81,458 remained outstanding at the liquidation date;

 As a consequence of the undisclosed assessed turnover, it was determined that MRL had breached the registration threshold for VAT and it was compulsorily registered by HMRC on 22 March 2019, with effect from 16 October 2012;

•  No return was filed by LC and HMRC raised an assessment for £162,345 for the period October 2012 to April 2019;
• Further assessments were raised to the liquidation date, however he advised the liquidator that LC had ceased trading on 30 March 2019;
•  No payments were made towards the assessments and at least £162,345 remains outstanding for VAT;
•  No record was kept of his drawings;
• HMRC estimated that these totalled £194,063 in the period from incorporation to 31 October 2017;
• Penalties were issued by HMRC for deliberate inaccuracies in reporting CT, of £46,146, and a personal liability notice for this sum was also sent to him;
• Further penalties totalling £109,850 were issued in respect of VAT, of which £96,595 was in respect of a ‘deliberate failure to notify’ and he was also made personally liable for this latter amount.
• He did not ensure that a full record was maintained of cash drawn from LC by him or for his benefit and failed to co-operate fully with HMRC’s investigation by failing to provide information requested in a timely manner and/or at all, leading to penalties totalling £3,340 being issued.

Case 19 – Director Disqualification for acting whilst subject to a disqualification ban

Director Disqualified for 8 years by an undertaking agreed by the director.

Between at least 01 October 2018 and 03 January 2020, when the company entered liquidation, The Director acted as a director of The Liquidated Company, without leave of the Court, in breach of the restrictions of a 10 year disqualification undertaking effective from 06 October 2011 to 05 October 2021.

Case 20 – Director Disqualification for breachs of the Health & Safety Work 1974 Act

Director Disqualified for 6 years by a signed undertaking of the director.

The Director Disqualified breached his duties as a director of The Insolvent Company by failing to ensure that it complied with legislative requirements in that:

• The Company did not comply with its statutory obligations under the Health and Safety at Work Act 1974 which resulted in the collapse of scaffolding on the High Street in Maidenhead on 30 April 2018.
• Following an investigation into the collapse of the scaffolding by the Health and Safety Executive, on 09 November 2020 The Insolvent Company was issued with a fine by the Magistrate’s Court in the sum of £160,000 (excluding costs), which remained unpaid when The Insolvent Company went into liquidation on 21 June 2021.

Case 21 – Director Disqualification for fraudulent evasion of VAT and MTIC Fraud

Director Disqualified for 6 years by a signed undertaking of the director.

From at least February 2016 The Company Director caused or allowed The Dissolved Company to participate in transactions which were connected with the fraudulent evasion of Value Added Tax (VAT), such connections being something which The Company Director either knew or should have known about.

The Company Director caused or allowed The Dissolved Company to wrongfully claim at least £2,348,290 from HMRC in relation to its 02/16 to 02/17 VAT periods. These input VAT repayment claims were subjected to extended verification by HMRC and denied. HMRC made VAT assessments of £2,348,290 which was reduced to £2,317,102 following an appeal. The Company Director placed The Dissolved Company into liquidation prior to the full tribunal hearing the matter, and the liquidator accepted the assessments on behalf of The Dissolved Company.

Annex for allegation 1

The Company Director was aware that the risk of Missing Trader Intra-Community (MTIC) fraud was rife in the wholesale of drinks industry, or ought to have been aware thereof because:

On 18 December 2003 a letter was sent in respect of MTIC advising that soft drinks was among the commodities regularly involved in VAT fraud within the EU and advising The Dissolved Company to validate the status of new customer/suppliers with a specific HMRC office; A list of the information that was required was also listed on the letter.

• He attended his first meeting with HMRC on 24 November 2006 where due diligence was discussed.
• On 15 February 2007 a letter was supplied outlining the Means of Knowledge and referring to Notice 726. A copy of Notice 726 was issued on 27 September 2007. On 30 June 2010 HMRC provided a letter in respect of MTIC fraud, advising of a new office to contact for requests for verification of the VAT status of new customers. A copy of Notice 726  ‘Joint and Several Liability’ was also enclosed along with lists of the information that should be sent to HMRC in respect of new or potential customers/Suppliers. On 26 August 2014 HMRC issued a VAT Fraud Alert: Alternative Banking Platforms; amongst other things on this letter was the need to know your customer checks.
• He attended further meetings with HMRC between 30 August 2007 and 11 November 2015 where due diligence was discussed. At the 11 November 2015 meeting, he received a tax loss letter which referred to purchases that DC had made from a supplier between 1 April 2015 and 30 June 2015. The amount of transactions was 241 with the tax loss amounting to £760,000 approximately. A further letter concerning tax losses in The Dissolved Company transactions with a further supplier was sent to The Dissolved Company on 11 December 2015. This letter included 79 transactions between 1 July 2015 and 24 July 2015 resulting in a tax loss of over £210,000. The Kittel principle was explained to The Company Director. The HMRC conclusion to the meeting was that due to the type of goods traded by The Dissolved Company, there was a risk of these being involved in supply chains with potential tax losses.
• On 22 August 2016 The Company Director telephoned HMRC to make enquiries in respect of a specific supplier, he was advised that it looked like there may be tax losses in the supply chains that involved this supplier and The Company Director was advised to take this into consideration when determining whether to continue trading with this company.
• On 22 September 2016 a letter concerning tax losses in The Dissolved Company transactions with this company was sent to The Dissolved Company. The letter included 114 transactions between 7 January 2016 and 3 March 2016 resulting in a tax loss of over £335,000.
• On 1 October 2016 a meeting between officers of HMRC and The Company Director and his advisor were held at the trading premises of The Dissolved Company during which a discussion in respect of the tax loss letter sent to The Dissolved Company and dated 22 September 2016 was discussed. HMRC were concerned as tax losses had earlier been found with another supplier for trade in the last 6 months of 2015. HMRC’s conclusion was that due to the type of goods traded by The Dissolved Company, there was a risk of these being involved in supply chains with potential tax losses.
• On 31 May 2017 a further visit was undertaken by HMRC, its current activities and further plans were discussed. HMRC confirmed they had concerns in respect of one of its suppliers.
• On 13 December 2017 a meeting between officers of HMRC and The Company Director were held in London to discuss business activities and tax loss letters. The Company Director advised he had read Kittel but does not validate all new supplies through HMRC, as he has been told it’s not efficient. The HMRC conclusion to the meeting was they would continue with ongoing checks with concern over the level of tax loss deals since 02/16.

The trading in which The Dissolved Company was involved had features which put, or should have put, The Company Director on enquiry about the legitimacy thereof, as follows:

• On 11 November 2015 HMRC wrote to The Dissolved Company in respect of purchases made from a company. It advised that Enquiries made by HMRC have established that sales made by the company commenced with a defaulting trader, and that 241 transactions undertaken by The Dissolved Company between 1 April 2015 and 30 June 2015 therefore commenced with a defaulting trader, resulting in a loss to the public revenue that exceeds £760,000. A list of the invoices was provided.
• On 11 December 2015 HMRC wrote to The Dissolved Company in respect of purchases made from a company. It advised that Enquiries made by HMRC have established that sales made by the company commenced with a defaulting trader and that 79 transactions undertaken by The Dissolved Company between 1 July 2015 and 24 July 2015 therefore commenced with a defaulting trader, resulting in a loss to the public revenue that exceeds £210,000. A list of the invoices was provided.
• On 30 June 2016 The Dissolved Company were informed that a company with which they had been dealing had been de-registered and they were asked to provide evidence of due diligence checks they had undertaken on the de-registered company.
• On 22 September 2016 HMRC wrote to The Dissolved Company  in respect of purchases made from a company. It advised that Enquiries made by HMRC have established that sales made by the company commenced with a defaulting trader and that 114 transactions undertaken by The Dissolved Company between 7 January 2016 and 3 March 2016 therefore commenced with a defaulting trader, resulting in a loss to the public revenue that exceeds £335,000. A list of the invoices was provided.
• On 24 January 2017 HMRC wrote to The Dissolved Company in respect of purchases made from a company. It stated that Enquiries made by HMRC have established that sales made by the company commenced with a defaulting trader and that 145 transactions undertaken by The Dissolved Company between 7 March 2016 and 31 May 2016 therefore commenced with a defaulting trader, resulting in a loss to the public revenue that exceeds £425,000. A list of the invoices was provided.
• On 29 June 2017 HMRC wrote to The Dissolved Company in respect of recent purchases made from a company. It stated that Enquiries made by HMRC have established that sales made from a company commenced with a defaulting trader and that 103 transactions undertaken by The Dissolved Company between 1 November 2016 and 30 January 2017 therefore commenced with a defaulting trader, resulting in a loss to the public revenue that exceeds £385,000. A list of the invoices was provided.
• On 17 October 2017 HMRC wrote to The Dissolved Company in respect of purchases made from a company. It stated that Enquiries made by HMRC have established that sales made by the company commenced with a defaulting trader and that 117 transactions undertaken by The Dissolved Company between 1 March 2017 and 31 May 2017 therefore commenced with a defaulting trader, resulting in a loss to the public revenue that exceeds £380,000. A list of the invoices was provided.
• On 22 March 2018 HMRC wrote to The Dissolved Company in respect of the verification of the VAT returns for the 08/17 and 11/17 period. It stated As a result of our enquiries in respect of your 08/17 and 11/17 VAT return periods, we now know that 67 of the transactions (where the whole chain has been established) commenced with a defaulting trader, resulting in a loss to the public revenue that exceeds £182,768.
• On 12 July 2018 HMRC wrote to The Dissolved Company in respect of the verification of the VAT return for the 02/16 period. It stated, As a result of our enquiries in respect of your 02/16 VAT period, we now know that 73 of the transactions (where the whole chain has been established) commenced with a defaulting trader, resulting in a loss to the public revenue that exceeds £188,351. A list of the invoices was provided.
• On 26 September 2018 HMRC wrote to The Dissolved Company in respect of the verification of the VAT returns for the 02/18 and 05/18 periods. It stated, as a result of our enquiries in respect of your 02/18 and 05/18 VAT return periods , we now know that 67 of the transactions (where the whole chain has been established) commenced with a defaulting trader, resulting in a loss to the public revenue that exceeds £111,768.
• HMRC have stated there were a variety of factors that show contrivance in the transactions undertaken including, The Dissolved Company never held sight, sighted or inspected the stock, often stock was delivered directly to the The Dissolved Company customer, the deals were back to back and either completed on the same day or within a very short time-frame, there were no contracts or insurance in place, The Dissolved Company were always able to fulfil orders from customers even when received in advance of a purchase; suppliers down the chain not, apparently having knowledge of their immediate customer but having knowledge of The Dissolved Company suggesting a control and/or influence over the more extended supply chain.

Despite being aware of VAT fraud in The Dissolved Company trade sector and engaging in transactions bearing the features of such fraud, The Company Director failed to ensure that The Dissolved Company carried out effective steps, checks and/or due diligence in respect of its trade and of its trading partners as follows:

• On 22 February 2018 HMRC issued a ‘Notification of a Decision to Refuse Entitlement to the Right to Deduct Input tax. The letter acted as a notification of an assessment which affected the total input tax in the periods 02/16 (194 deals), 05/16 (145 deals), 08/16 (154 deals), 11/16 (140 deals) and 02/17 (90 deals) in the total sum of £2,348,290 (later reduced).
• On 22 March 2018 HMRC wrote to The Dissolved Company to update them on the verification of the 08/17 and 11/17 VAT periods in which The Dissolved Company was informed as a result of our enquiries in respect of your 08/17 and 11/17 VAT return periods, we now know that 67 of the transactions (where the whole chain has been established) commenced with a defaulting trader, resulting in a loss to the public revenue that exceeds £182,768. The Dissolved Company were advised to satisfy themselves that they had undertaken sufficient due diligence and were again advised of the examples of checks that they may consider were listed in Notice 726 which had been issued to them.
• The trading chains in which The Dissolved Company was involved caused significant losses to HMRC:
• Every deal under consideration by HMRC has been traced or, otherwise equated on a balance of probabilities basis, to missing and/or defaulting traders.
• During a visit on 11 November 2015 an officer had handed a Tax Loss letter in respect of purchases made from a company between April and June 2015, amounting to a loss to the public purse. The officer issued a warning and gave various leaflets explaining HMRC’s position, yet despite this The Dissolved Company continued to trade with the company through to mid-January 2016 resulting in a further loss to HMRC.
• The due diligence The Dissolved Company carried out was considered wholly inadequate, consisting of no more than basic and perfunctory checks. This against the backdrop of The Dissolved Company having been notified in December 2015, September 2016 and January 2017 of huge levels of tax losses in its supply chains which, in the Commissioners view, should have put The Dissolved Company at the highest state of alert and caution in respect of its suppliers and the supply chain
• On 20 March 2018 The Company Director requested the assessments be reviewed.
• On 1 May 2018 The Dissolved Company were advised that a review would be undertaken
• On 15 February 2019 (after liquidation) HMRC completed their review and amended the claim to £2,317,102.
• HMRC carried out an independent review and upheld their decision

The liquidator accepted the assessment on behalf of the company in the total sum of £2,317,102.

Case 22 – Director Disqualification for fraudulent evasion of VAT and MTIC Fraud

Director Disqualified for 9 years by a director signed undertaking.

The Company Director caused or allowed The Dissolved Company to participate in transactions which were connected with the fraudulent evasion of Value Added Tax (VAT) from period 09/15 onwards, such connection being something with which she either knew or should have known about.

She also caused or allowed The Dissolved Company to make wrongful claims for VAT for the periods 03/16, 06/16, 09/16, 12/16, 03/17, 06/17, 09/17 and 12/17 totalling £2,646,905.

Annex for allegation 1:

1. She was aware that the risk of Missing Trader Intra-Community (MTIC) VAT fraud was rife in the wholesale trade of electronic goods or ought to have been aware thereof because HMRC Officers had visited and educated her on the dangers:
2. Prior to commencement of wholesale trading in electronics goods, HMRC Officers spoke with her co-director on 06/02/15 and established that he was operating the newly established wholesale side of the business. Her co-director showed a good basic understanding of Know Your Customer (KYC) checks and was warned that electronics goods were high risk items and due diligence measures were discussed with him. Officers then visited The Dissolved Company’s premises on 11/02/15 and met her co-director and discussed that The Company Director should not be a tick box exercise, warned about VAT hijacking, how to spot missing trader fraud and issued a copy of their PN726 information notice which gives detailed information on due diligence measures that companies can take to establish the integrity of supply chains.
3. On 13/02/15 HMRC emailed her co-director reiterating that fraud warnings and due diligence were discussed at the meeting on 11/02/15 and that it would be useful to read HMRC’s publications How To Spot Missing Trader Fraud and PN726.
4. On 07/07/15 HMRC wrote to The Dissolved Company and the company’s accountants by email arranging a meeting at the company’s premises on 10/07/15 adding a link to their publication How To Spot Missing Trader Fraud.
5. On 14/07/15 HMRC sent an education and warning letter to The Dissolved Company with advice on risks associated with MTIC fraud and procedures for validating VAT registration details of trading partners with HMRC’s office at Bootle. The letter further warned about the use of Alternative Banking Platforms and Money Service Businesses which were used to avoid regulation and scrutiny by the UK’s authorities and The Dissolved Company was warned that it could be made jointly and severally liable for the unpaid VAT of another VAT-registered business when buying or selling specified goods such as electronic goods and that more information could be found in PN726 Joint and several liability for unpaid VAT and referred to read How To Spot Missing Trader Fraud.
6. On 30/07/15 HMRC Officers had a meeting with her co- directors and the company’s accountant at The Dissolved Company’s trading premises where it was confirmed that the company was trading in high end audio equipment on the retail side, and from period 03/15 her co-director was operating the wholesale side which traded in TVs, Solid State Drives, Iphones and Ipads and a co-director was given a copy of How To Spot Missing Trader Fraud to read.
7. On 20/08/15 HMRC emailed The Dissolved Company, a co-director and the company’s accountant providing feedback on the visit of 30/07/15. HMRC advised that their publications Notice 725 – The Single Market and PN726 should be read, that IMEI numbers for mobile phones should be kept and to take account of trading partner’s geographical location and whether the director’s residence was different to their company’s as this can be a high risk indicator and to read the KYC advice and risk indicators in Excise Notice 196.
8. On 25/11/15 a HMRC Officer e-mailed The Dissolved Company and the company’s accountants informing that they had been appointed as the company’s VAT officer and attached a copy of HMRC’s notification letter and VAT validation information which provided further information for companies operating in trade sectors deemed to be at high risk of VAT fraud.
9. b) The Dissolved Company’s trading had some common features of MTIC fraud which should have put the directors on enquiry regarding the legitimacy thereof, as follows:
10. Goods traded were electronic and traded in bulk i.e. high MTIC risk goods such as TVs, Solid State Drives, Iphones, Ipads, Sony Playstations, Microsoft Xbox, Microsoft Office etc.
11. In common with other companies trading in MTIC goods The Dissolved Company’s accounts show that the turnover had a dramatic increase when the company entered wholesale trading in 2015. In 2014 the turnover from retail only sales was £565,518 which jumped nearly eight fold to £4,430,578 in 2015 and then doubled again to £9,254,628 in 2016 and then jumped to £10,296,371 in 2017.

At the meeting with HMRC on 30/07/15 her co-director confirmed that all deals were carried out on back to back basis.

1. There was no commercial reason to purchase European spec goods (e.g. Televisions) from Poland, import them into the UK and then export them to the Czech Republic.
2. The Dissolved Company conducted its wholesale trades in Euros even when goods were sold UK to UK, this did not make any commercial sense.
3. HMRC informed -The Dissolved Company that at least six of its trading partners had their VAT number cancelled and issued veto letters meaning that any Input Tax claimed in relation to transactions involving these suppliers which purport to have taken place after the effective date of cancellation of registration, may fail to be verified.
4. c) HMRC have supplied some deal logs and where the whole supply chain has been established, The Dissolved Company-The Dissolved Company’s trades had the following further contrived arrangements and features:
5. In period 06/16, 25 complete supply chains were identified and they show:

•  9 deals were completed on the same day on back to back basis.
•  15 deals had zero stock left over i.e. stock was matched exactly and 10 deals had between 1 and 568 units of stock left over.
•  16 deals were completed on a different day, however, in 9 of these deals the customer’s invoice pre-dated the supplier’s invoice from 1 day to 8 days thereby indicating pre-orchestration.

 Another anomaly noted is that 12 of the deals are showing a loss in the mark ups and profit which would indicate that the deals were not genuine.

In period 09/16, 19 complete supply chains have been identified and they show:

•  9 deals were completed on the same day on back to back basis.
•  13 deals had zero stock left over i.e. stock was matched exactly and 6 deals had between 10 and 568 units of stock left over.
•  10 deals were completed on a different day, however, in 6 of these deals the customer’s invoice pre-dated the supplier’s invoice from 3 days to 8 days thereby indicating pre-orchestration.
•  Another anomaly noted is that 7 of the deals are showing a loss in the mark ups and profit which would indicate that the deals were not genuine.

In period 12/16, 10 complete supply chains have been identified and they show:

•  1 deal was completed on the same day on back to back basis.
•  6 deals had zero stock left over i.e. stock was matched exactly and 4 deals had between 42 and 500 units of stock left over.
•  9 deals were completed on a different day, however, in 2 of these deals the customer’s invoice pre-dated the supplier’s invoice by 1 to 4 days thereby indicating pre-orchestration.
•  Another anomaly noted is that 3 of the deals are showing a loss in the mark up and profit which would indicate that the deals were not genuine.

In period 03/17, 10 complete supply chains have been identified and they show:

•  1 deal was completed on the same day on back to back basis.
• 6 deals had zero stock left over i.e. stock was matched exactly and 4 deals had between 42 and 500 units of stock left over.
• 9 deals were completed on a different day, however, in 2 of these deals the customer’s invoice pre-dated the supplier’s invoice by 1 to 4 days thereby indicating pre-orchestration.

1.  

 Another anomaly noted is that 3 of the deals are showing a loss in the mark up and profit which would indicate that the deals were not genuine

In period 06/17, 7 complete supply chains have been identified and they show:

•  2 deals had zero stock left over i.e. stock was matched exactly and 5 deals had between (-333 i.e. minus) and 1,060 units of stock left over.
•  All 7 deals were completed on a different day.
•  Another anomaly noted is that 3 of the deals are showing a loss in the mark up and profit which would indicate that the deals were not genuine.
• vi.In period 09/17, 3 complete supply chains have been identified and they show:
•  All 3 deals were completed on a different day.
•  All 3 deals had between 80 and 3,800 units of stock left over.
•  Another anomaly noted is that 2 of the deals are showing a loss in the mark up and profit which would indicate that the deals were not genuine.

1. d) For period 12/17, insufficient information was provided to HMRC to establish full supply chains although electronics goods such as wireless headphones and Sony PS4s are seen being purchased from the usual suppliers.
2. i) The Dissolved Company conducted its wholesale trading via an Alternative Banking Platform (ABP), which are a kind of virtual financial institution that provides the functionality of a traditional bank but without a bank’s reporting or regulatory requirements or transparency, thereby facilitating fraudulent activity.
3. ii) Despite the warnings given about the use of ABPs to The Dissolved Company in their education letter of 14/07/15, HMRC noted that Bartlett’s The Dissolved Company was using an ABP to conduct its wholesale business.

iii) On 06/06/17 HMRC wrote to the company’s accountants informing that Plutus FX had been seen as a vehicle for payment of monies into the company’s account and required information on the customers that were using this foreign exchange service.

1. iv) The company accountants confirmed that The Dissolved Company was using the ABP to transfer money from the Pound account to the Euro account but failed to provide information on the customers using the ABP.
2. e) Although being aware of MTIC VAT fraud in The Dissolved Company’s trade sector and engaging in transactions bearing the features of such fraud, she failed to ensure that The Dissolved Company carried out effective steps, due diligence or other checks in respect of its trade and trading partners.
3. i) At the meeting with HMRC Officers on 11/02/15 her co-director was informed that the wholesale electronics sector was considered high risk for VAT fraud and he was asked about what he knew about KYC checks, of which he had a basic / good understanding.
4. ii) By letter dated 14/07/15 HMRC informed The Dissolved Company on risks associated with Missing Trader Intra Community Fraud and procedures for validating VAT registration details of trading partners with HMRC. The Dissolved Company ignored this requirement and only twice requested VAT validation on 15 and 16/12/15. On each occasion the validation request was on the supplier, which HMRC positively validated on 17/12/15.

iii) At the meeting with HMRC Officers on 30/07/15 her co-director informed the Officers that he carried out KYC checks when he receives the customer’s purchase order. He said he requested company documents such as VAT certificates, terms and conditions and UK and EU photo ID of the directors.

1. iv) In their input tax denial letters HMRC also confirmed that The Dissolved Company’s due diligence was lacking.
2. v) Company records collected by the liquidator do not contain any due diligence, VAT validation requests, VAT certificates, terms and conditions, photo IDs etc.
3. vi) The Dissolved Company traded with several suppliers and customers with whom it carried out wholesale trade between 03/15 and 12/17 and should have validated each one before carrying out trade with them. This indicates that the directors were not worried about carrying out the validations because they knew that each trade was pre-determined and there was no chance of the trades failing.
4. f) Furthermore, the trading chains in which The Dissolved Company was involved were associated with significant loss to the UK and EU member state public purse. Some notable tax losses notified to the company were:
5. i) Despite warnings and education to establish the integrity of supply chains being given to The Dissolved Company prior to starting wholesale trading in bulk electronics goods, tax losses were incurred by its customer Company T in every period of 2015 in the EU. The Dissolved Company had made sales to Company T between 25/08/15 16/10/15 totalling £686,978.
6. ii) In period 12/15 The Dissolved Company’s supplier Company B caused fraudulent tax losses of £10,010. Company B caused additional fraudulent tax losses of £335,230 in period 03/16.

iii) In period 06/16 Bartlett’s The Dissolved Company’s supplier Company C caused fraudulent tax losses of £12,379.

454. iv) In period 12/16 The Dissolved Company’s EU supplier Company D caused fraudulent tax losses of £50,454.
455. v) In period 03/17 The Dissolved Company’s supplier Company E caused fraudulent tax losses of £51,206 which was in addition to tax losses of £20,000 already notified to The Dissolved Company in a letter by HMRC dated 13/04/17.
456. vi) In period 09/17 The Dissolved Company’s supplier Company F caused fraudulent tax losses of £86,266 and in 12/17 the same supplier caused fraudulent tax losses of over £43,000.

vii) In their letter to The Dissolved Company of 17/05/18 HMRC had informed that the cumulative value of tax losses notified to the company to date was £626,584.

905. g) Given the warnings of MTIC fraud, the hallmarks of The Dissolved Company’s trading scheme and the lack of adequate checks, the directors should not have expected HMRC to allow input VAT claimed for the 03/16, 06/16, 09/16, 12/16, 03/17, 06/17, 09/17 and 12/17 totalling £2,646,905. HMRC gave the following reasons for their denial decisions.
906. i) The deals in question were connected with fraudulent tax losses.
907. ii) Despite the high value of the goods being traded, The Dissolved Company failed to enter into written contracts or had terms of business which adequately protected its interests in the event that goods purchased were faulty, missing, damaged or not to the correct specification.

iii) The purchase invoices supplied to HMRC did not contain the elements associated with a genuine commercial supply such as a retention of title clause, payment terms, sequential numbering and an accurate description of the goods being supplied. The absence of these details did not concern the directors because they knew that these were not genuine commercial transactions but were instead connected with fraud.

1. iv) Records supplied to HMRC showed no contracts, price negotiation or other documentation in support of the invoices; the willingness to undertake such high value transactions without the need for written contracts indicates that the directors knew the deals could not fail because they were predetermined and connected with fraud.
2. v) Since early 2015 The Dissolved Company had received advice and warnings from HMRC both verbally and formally with the issue of letters and publications such as MTIC awareness letters, veto letters, Notice PN726 Joint and Several Liability, which informed the company of the high risk of VAT fraud in the wholesale of electronic goods, and the need to take measures to minimise the risk of involvement with fraud. Despite this extensive general awareness of fraud The Dissolved Company still went ahead and traded with its suppliers and customers without undertaking meaningful checks.
3. vi) The trading of wholesale goods was undertaken in a distinctly different manner to those undertaken in the retail side of the company’s business; retail goods were usually purchased from an established authorised distributor or manufacturer, were billed and paid for on a trade account with terms and conditions, and were delivered into a store where the goods could be inspected and demonstrated to potential customers.

Furthermore, The Dissolved Company requested a formal review of HMRC’s assessment of the company’s input tax claims on which HMRC carried out assessments after the company’s failure to provide sufficient evidence for the input tax claims as follows:

12/15 claimed £121,129.41 assessment £101,824 issued 8/4/16

06/16 claimed £855,879.25 assessment £353,834 issued 1/11/16

09/16 claimed £1,048,898 assessment £1,048,898 issued 23/12/16

HMRC carried out an independent review of the assessments and issued their decision to the company on 24/05/17 upholding their decision and concluding, Each assessment has been validly made within the appropriate timing provisions. There still remains insufficient evidence to support your claim to input tax, the decision to assess input tax in periods 12/15, 06/16 and 09/16 is therefore upheld.

The Dissolved Company was given 30 days to appeal to a tax Tribunal but did not pursue this option.”

“The Banned Director failed to ensure that The Liquidated Company Ltd (the Company) submitted monthly PAYE returns for the tax year 2020/2021, or in the alternative failed to ensure that the company had prior agreement to submit an annual return to HMRC. This resulted in a claim of £106,968 being created, of which £90,849 was created 5 days before the liquidation date of 31 March 2021. In that:

 A payroll scheme was set up by the Company in January 2020.

 Bank statements confirm that employees did not receive a monthly salary net of tax.

 Payslips were not issued on a monthly basis and no returns filed at HMRC. In order for a company to pay its PAYE liability on an annual basis, it must be with the prior agreement of HMRC and the salary payment must be made in one lump sum net of any PAYE/NIC due.

 Between 06 April 2020 and 23 February 2021, a number of transfers were made to her totalling £79,000.

 Between 06 April 2020 and 31 December 2020, a number of transfers were made to the Co-Director, an employee of the company, totalling £72,850

 Between 06 April 2020 and 08 December 2020, the Company made a number of payments that were for the personal benefit of her and Co-Director totalling £114,219.76

 On 15 January 2021 a payment of £3,727.64 was made to HMRC in respect of PAYE.

 Payslip no. 1 was issued to the Co-Director on 29 January 2021 stating that his salary for the month was £24,000 gross and £24,483.34 net.

 Payslip no. 1 was issued to her on 26 March 2021 stating that her salary for the month was £226,850.45 gross and net of £136,001.01

 On 31 March 2021, the director sought the advice of an Insolvency Practitioner and the company was placed into liquidation.

 HMRC have submitted a claim in the sum of £106,968.49 in respect of unpaid PAYE.

Case 23 – Director Disqualification for not filing accurate tax returns

Director Disqualified for 11 years by Order at trial.

The Disqualified Director failed to ensure The Liquidated Company (The Liquidated Company) filed accurate tax returns during the periods covering 2012 to 2018.

Following a review of the company records for the year ending 31st January 2016, undertaken by HMRC in 2017, they determined that not all cash sales were being recorded:

HMRC’s concerns were put to him at a meeting on 6th July 2017 specifically:

•  Wages shown in the accounts did not allow the shop to be staffed adequately for the opening hours;
•  No records were kept of monies transferred to the Directors personal accounts for company expenditure;
•  The cash sales recorded was insufficient to allow for all the cash expenditure incurred by the company;

Following further meetings and protracted correspondence between the parties, HMRC have filed a claim in the liquidation of which £405,529 is in respect of the under declaration of Corporation Tax between 2012 and 2018.

In HMRC’s notes of the meeting held with the Director on the 6th November 2017, the HMRC Officer states he considered that the behaviour had been at least deliberate. The director was aware that the takings record was not accurate and yet he still decided to submit the returns. This was confirmed in HMRC’s letter to the company’s accountants dated 18th December 2018.

At the date of liquidation, total liabilities are £674,802 comprising of the HMRC debt detailed above, a further £239,582 due to HMRC, £10,004 to trade & expense creditors and £19,687 to a bank.

Case 24 – Director Disqualification for submitting inaccurate tax returns

Director Disqualified for 3 years by a director signed undertaking.

The Director Disqualified caused or allowed The Liquidated Company to submit inaccurate Company Tax returns to HM Revenue & Customs (HMRC) in that:

• On 01 February 2019, HMRC wrote to The Liquidated Company to confirm that they were commencing a check of the Company’s tax return for the period ending 30/09/2017;
• On 19 July 2019, HMRC wrote to The Liquidated Company stating that enquiries to date had established that there were inaccuracies in the Company tax return for the accounting period ending 30/09/2017, and for this reason HMRC were now considering the position in previous accounting periods;
• On 06 March 2020, HMRC informed The Liquidated Company that, due to inaccuracies in the Company’s tax return for the period ending 30/09/2017, they were now checking the Company Tax Return for the period ending 30/09/2018;
• HMRC wrote to The Liquidated Company on 15 July 2020 informing them that their investigation had established that additional tax was due, and providing a breakdown of the figures used for the adjustments to the figures contained in the company’s tax returns for the accounting periods ended 30/09/2015 to 30/09/2018;
• HMRC’s letter dated 15 July 2020 noted that HMRC believed that The Liquidated Company’s trading profits had been understated, and that the directors of the company had been the beneficiaries of these understatements;
• The Liquidated Company’s accountant subsequently responded to HMRC providing information relating to the adjustments in their letter of 15 July 2020;
• On 12 October 2020, HMRC wrote to The Liquidated Company with revised adjustments following the representations from the company’s accountant, noting that their investigation had noted inaccuracies in The Liquidated Company’s company tax returns, and that Corporation Tax totalling £85,575 was due on additional profits for the accounting periods ended 30/09/2015 through to 30/09/2018;
• HMRC’s letter of 12 October 2020 also noted that Corporation Tax totalling £135,752 was due on monies which ought to have been included in the Directors’ Loan Accounts for the accounting periods ended 30/09/2016 through to 30/09/2018;
• On 25 November 2020, The Liquidated Company’s accountant wrote to HMRC informing them that Patterson agreed to their conclusions and wished to move forwards to penalty discussions.
• On 01 December 2020, HMRC wrote to The Liquidated Company stating that they believed that the inaccuracies in the company tax returns were deliberate, and as such a penalty of £92,957 was being raised;

The Liquidated Company entered Creditors Voluntarily Liquidation on 23 August 2021 with liabilities totalling £533,863, of which £483,746 related to HMRC’s claim in the Liquidation

Case 25 – Director Disqualification for fraudulent evasion of VAT and MTIC Fraud

Director Disqualified for 5 years by an undertaking agreed by the director.

The Banned Director, failed to ensure that The Liquidated Company, complied with its statutory obligations to HM Revenue & Customs (HMRC) by failing to register The Liquidated Company for VAT from 24 July 2019 to at least 31 January 2022, in that:

• A business is required to register with HMRC for VAT within 30 days of the end of the month, if, by the end of any month the turnover for the last 12 months exceeds the current registration threshold. For the period 01 April 2017 to 31 March 2018 the threshold for registering a company for VAT with HMRC was a turnover of £85,000.
•  HMRC held Online Intermediary data showing that income was above the VAT limit when the company took over the business on 24 July 2019, (HMRC hold data prior to The Liquidated Company taking over the business). Annual accounts prepared for The Liquidated Company by The Banned Director personally and filed at Companies House show turnover for the year ended 31/07/2020 as £84,725. The Liquidated Company provided HMRC a listing of their income between August 2019 and June 2021, which amounted to £211,741.
•  Following an investigation, HMRC asked The Liquidated Company to register for VAT, but they failed to register. On 25 January 2022, HMRC processed a compulsory registration for VAT from 24 July 2019, as income was over the VAT limit when The Liquidated Company took over the business and wrote to The Liquidated Company to confirm this.
•  HMRC calculated the VAT due from August 2019 to April 2021 (when they became aware of the failure to register) as £16,214 using best judgement in the absence of any purchase figures being supplied.
•  Further unquantified VAT is due for the remaining period May 2021 to January 2022.
•  Statements for The Banned Director’s personal bank account, used for The Liquidated Company, do not include all purchases and cash receipts based on the information provided to HMRC.
•  The liquidator was unable to verify the true liability owed to HMRC in the absence of complete records for The Liquidated Company.
•  At the date of liquidation HMRC were the only known creditor of The Liquidated Company in relation to VAT.

Case 20 – Director Disqualification for The Immigration, Asylum and Nationality Act 2006 offences

Director Disqualified for 8 years by a signed undertaking of the director.

The Banned Director breached his duties as a director of The Insolvent Company by failing to ensure that it complied with legislative requirements in that:

The Insolvent Company did not comply with its statutory obligations under The Immigration, Asylum and Nationality Act 2006 by employing 2 people who did not have the right to work

Following a visit from Home Office Immigration Officers on 27 November 2021, during which this breach was discovered, The Insolvent Company was issued with a penalty notice in the sum of £30,000 which remains unpaid

The Banned Director was in office as a director of the company at the time of the Home Office visit.

Case 21 – Director Disqualification for breaches of the Privacy and Electronic Communications Regulations 2003 (PECR)

Director Disqualified for 6 years by an undertaking agreed by the director.

Between 01 June 2018 and 01 September 2018 The Banned Director caused The Liquidated Company to contravene regulation 19 and 24 of the Privacy and Electronic Communications Regulations 2003 (PECR) in that:

• Between 01 June and 01 September 2018, The Liquidated Company instigated automated calls, of which 52,994,243 connected.
• Between 01 June 2018 and 01 September, The Information Commissioners Office (ICO) received at least 2,835 complaints via the online reporting tool
• Between 01 June 2018 and 01 September, the Telephone Preference Service (TPS) received at least 388 complaints via the online reporting tool
• The calls where persistent and individuals state they did not consent to receive automated calls. The Liquidated Company have not provided any evidence that recipients had given their consent to make the calls

On 26 February 2020 ICO imposed a fine in the sum of £500,000 on the Liquidated Company for the contravene of regulation 19 and 24 PECR after completion of their investigation. This is still unpaid at liquidation

Case 22 – Director Disqualification for failing to pay VAT and Corporation Tax

Director Disqualified for 9 years by a director signed undertaking.

The Disqualified Director failed to ensure that The Liquidated Company met its financial commitments as regards to Corporation Tax (‘CT’) and Value Added Tax (‘VAT’) and caused the company to continue trading whilst withdrawing funds for the benefit of himself. As a result, the company was unable to meet its financial commitments to HMRC as and when they became due, from 1 October 2017. In that:

• The Liquidated Company lodged Corporation Tax Returns for the periods ending 31 December 2016 to 31 December 2021 totalling £69,334; CT was overdue and in arrears from 1 October 2017.
• The Liquidated Company made two payments towards its CT liabilities being £1,000 on 17 January 2018 and £1,000 on 18 September 2019, which when applied to the earliest outstanding period leaves CT overdue from the period ending 31 December 2016; due for payment from at least 1 October 2017.
• HMRC have claimed £70,804 in respect of CT, for periods ending 31 December 2016 to 31 December 2021 based on Returns totalling £67,334 plus interest.
• The Liquidated Company lodged VAT Returns for the periods ending March 2018 to March 2021 totalling £57,376; VAT was overdue and in arrears from at least 7 April 2018.
• The Liquidated Company made three payments towards its VAT liabilities being £4,801, £5,025 and £5,025 on 4 July 2018, 1 October 2018 and 2 January 2019 respectively for the June 2018, September 2018 and December 2018 VAT Returns (which when applied to the earliest VAT debt leaves VAT remaining overdue from period ending September 2018); due for payment from at least 7 October 2018.
• HMRC have claimed £43,650 in respect of VAT, for periods ending March 2018 to March 2021 inclusive of surcharges.
• Between 1 October 2017 and 14 May 2021 (date of liquidation); £421,158 was paid into ORL’s bank account; of which £264,557 was paid to The Banned Director, £24,054 was paid to HMRC, £15,993 to an Associated Company and £116,554 to third parties or trade and expense creditors.
• HMRC have claimed £114,454 within the liquidation proceedings, being VAT of £43,650 and Corporation Tax of £67,334 plus interest. The only other creditors at the date of liquidation were £22,000 owing to a bank and £900 to employees

Case 23 – Director Disqualification for failing to submit accurate VAT returns

Director Disqualified for 1 years by Order of the Court.

Between 01 May 2019 and 08 July 2020 (the period HMRC raised assessments for), The Disqualified Director failed to ensure The Liquidated Company submitted accurate Value Added Tax (VAT) returns to HM Revenue and Customs (HMRC), which resulted in additional VAT liabilities and penalties that remain unpaid at the date of liquidation. In that:

• The Liquidated Company registered for VAT on 01 March 2019;
• The Liquidated Company submitted 4 returns covering VAT periods 04/19 to 04/20 which were paid in full;
• The Liquidated Company submitted a final return totalling £36,211 for VAT period 07/20 on 21 September 2020 which remained outstanding at the date of liquidation;
• On 08 July 2020, The Liquidated Company was deregistered for VAT by HMRC as HMRC had determined The Liquidated Company registered address to be a virtual office and from the VAT point, cannot be classed as a permanent place of trade;
• Further, HMRC commenced an investigation into the company’s VAT returns and on 01 October 2020, HMRC officers determined that The Liquidated Company had failed to record and declare all sales and had therefore under declared their VAT;
• As a result, HMRC raised an Officer’s Assessment in the sum of £77,862 for under declared VAT liabilities for VAT periods 10/19, 01/20, 04/20 and 07/20 and imposed penalties totalling £1,042;
• At liquidation, The Liquidated Company liabilities totalled £166,627 of which £116,597 was owing to HMRC (£115,115 in respect of VAT, £1,282 in respect of PAYE and £200 in respect of Corporation Tax penalties).

Case 24 – Director Disqualification for failing to comply with the Health and Social The Liquidated Company Act (Regulated Activities) Regulations 2014 (HSCA)

Director Disqualified for 3 years by a signed undertaking of the director.

The Failed Director failed to ensure that ’The Liquidated Company complied with the Health and Social The Liquidated Company Act (Regulated Activities) Regulations 2014 (HSCA) with the result that the quality Commission (CQC) identified breaches of the HSCA. The CQC raised their concerns about fire safety and risk to the Lincolnshire Fire and Rescue Service who carried out an inspection and issued a Prohibition Notice on 10 September 2021 requiring ’The Liquidated Company to prohibit anyone from sleeping overnight or using the premises as a residence. ’The Liquidated Company entered liquidation on 12 October 2021.

• The Liquidated Company operated a residential care home providing personal and nursing care.
• The CQC carried out an unannounced inspection of ’The Liquidated Company’s premises on 08 and 13 September 2021 and found that the care home operated by ’The Liquidated Company was inadequate and had breached the HSCA by:
• Failing to ensure that people were protected from avoidable harm.
• Failing to ensure that staffing numbers were sufficient to meet peoples needs or keep them safe.
• Failing to ensure that staff had the skills and support they required.
• On 10 September 2021, following an inspection of the care home, Lincolnshire Fire and Rescue Service issued a Prohibition Notice requiring ’The Liquidated Company to prohibit anyone from sleeping overnight or using the premises as a residence until matters had been remedied. The local authority then took steps to protect residents in alternative facilities.
• As a result of its findings the CQC notified ’The Liquidated Company’s their intention to cancel their CQC registration. The Banned Director sought advice and ’The Liquidated Company’s ceased trading on 16 September 2021 and entered liquidation on 12 October 2021.

Case 25 – Director Disqualification for HMRC tax breaches and CIS offences

Director Disqualified for 5 years by an undertaking agreed by the director.

The Company Director (The Company Director) caused The Dissolved Company (The Dissolved Company) to register with HM Revenue & Customs (HMRC) for gross payment status under the The Dissolved Company Industry Scheme (CIS) and subsequently failed to cooperate with HMRC enquiries and failed to deliver up to HMRC sufficient records to confirm the legitimacy of the company’s registration. This resulted in HMRC cancelling The Dissolved Company’s gross payment status on the basis of HMRC’s decision that they had reasonable grounds to believe that The Dissolved Company had supplied false information regarding its legitimate activity in construction operations in order to obtain gross status for fraudulent purposes

• For VAT periods 05/18 to 05/19, while The Dissolved Company had gross payment status, The Company Director failed to ensure that accurate VAT returns were submitted to HMRC resulting in HMRC raising assessments for VAT under-declarations totalling £393,788 based on CIS records:
• The Dissolved Company registered for VAT effective from 1 March 2018 as a developer of building projects.
• The Dissolved Company registered for CIS as a subcontractor on 13 April 2018 and attained gross status on 7 May 2018.
• On 15 November 2018 HMRC wrote to The Company Director (in 2 separate correspondence) firstly requesting a review of the business records and instructing him to submit CIS/PAYE returns and secondly a legal request under Paragraph 1 of Schedule 36 to the Finance Act 2008 instructing Mr. The Company Director to produce business records; no response was received.
• On 26 July 2019 HMRC again wrote to The Company Director informing him that they would be issuing a VAT assessment based on CIS receipts that The Dissolved Company had received.
• On 29 August 2019 HMRC wrote to The Company Director and confirmed that based on declarations made by The Dissolved Company’s customer on the CIS database they would be raising VAT assessments for VAT quarters 05/18 to 05/19 totalling £393,788. The Company Director was given until 16 September 2019 to comment or provide information.
• On 17 September 2019 HMRC issued The Dissolved Company with a Notification of change of tax treatment which confirmed that their registration for gross payment was cancelled on the basis of HMRC’s decision that they had reasonable grounds to believe that The Dissolved Company had supplied false information regarding its legitimate activity in construction operations in order to obtain gross status for fraudulent purposes and to facilitate fraud within the supply chains that The Dissolved Company’s business was in.
• On 26 September 2019, in the absence of any contact from the Company Director, HMRC issued VAT assessments as per their letter of 29 August 2019; these assessments remained unpaid at liquidation.

---

Case 26 – Director Disqualification for acting as a director whilst being banned

Director Disqualified for 10 years by a director signed undertaking.

During the period 21 February 2014 to 11 April 2018 The Company Director acted as a director of The Dissolved Company despite not being registered at Companies House as a company director, whilst disqualified, contrary to Section 13 of the Company Directors Disqualification Act 1986 in that:

•  He was disqualified from acting as a director of a limited company from 19 May 2014 for a period of five years.
•  He caused or allowed cash withdrawals to be made from The Dissolved Company’ bank account between 01 March 2016 and 11 April 2018 totalling £200,688. This was at a time when The Dissolved Company became balance sheet insolvent and no supporting evidence has been provided to satisfactorily explain what this money was used for.

Case 27 – Director Disqualification for HMRC tax breaches and not registering for VAT

Director Disqualified for 5 years by a signed undertaking of the director.

Between 14 August 2018 (the date of incorporation and the beginning of trade) and 31 March 2022, The Disqualified Director failed to ensure that the Insolvent Company registered for value added tax (VAT) in compliance with its statutory obligations and make the requisite returns and payments to H M Revenue & Customs (HMRC). This failure resulted in VAT being assessed by HMRC totalling £71,879.20 and a penalty being issued for an additional £29,003.66.

The Banned Director’s failure to submit VAT returns and declare online takings also resulted in HMRC assessing the insolvent company for unpaid corporation tax (CT) of £13,721.68. This failure also resulted in a penalty being served on S&Y for £3,029.44.

HMRC issued personal liability penalties to The Banned Director on the basis that his actions were considered by them to be deliberate.

At liquidation, HMRC have submitted a claim of £133,425.22.

Case 28 – Director Disqualification for breaches of The Immigration, Asylum and Nationality Act 2006 Act

Director Disqualified for 4 years by Order of the Court.

The Director Disqualified breached his duties as the director of The Insolvent Company by failing to ensure that it complied with legislative requirements in that:

• The Insolvent Company did not comply with its statutory obligations under The Immigration, Asylum and Nationality Act 2006 resulting in the employment of 1 illegal worker;
• Home Office Immigration Enforcement (HOIE) after investigating The Insolvent Company issued a Notification of Liability for a Civil Penalty of £15,000 in respect of the employment of this illegal worker, payment of which was due on or before 1 January 2020.
• The Insolvent Company has not paid the fine due to HOIE

The Director was an appointed director of the company at the time of the breach of the Immigration, Asylum and Nationality legislation.