Sometimes directors can face disqualification for a range of different allegations, from tax and accounting offences to Immigration and fraud. Whatever the offence, we have over 20 years' experience helping directors. We will have seen it before. Call for a free consultation today.
We have been defending directors from trading to the detriment claims for over 20+ years. We have the mix of expertise int he practice which can help – legal, accounting, insolvency and tax.
Before instructing a lawyer – make sure you call us today. You wont be disappointed.
Our team includes
- Stephen Downie is a partner and heads up our director disqualification team. Stephen is dual qualified as both a solicitor (with higher rights) and is a qualified accountant with expertise in complex accounting, tax and financial matters. What differentiates Francis Wilks & Jones from other solicitors is that Stephen was previously an Insolvency Examiner within the Insolvency Service, an accountant working within Insolvency Practitioner firms investigating directors’ conduct and – following qualification as a solicitor in 2006 – Stephen spent 5 years as solicitor for the Secretary of State and Official Receivers, managing director disqualification claims. For the last 10-15 years since joining Francis Wilks & Jones, Stephen has advised and assisted Directors in defending director disqualification claims and getting them permission to continue acting as a director despite disqualification.
- Andy Lynch is an expert on any HMRC issues and is able to assist on any complex tax related matters. Before joining FWJ, Andy spent 18 years at HMRC in the special investigations team. He regularly defends directors in a variety of claims.
I was delighted by the work done by the team at FWJ and cannot recommend them highly enough. Their legal and tactical knowledge was spot on. I can now continue to grow my business free from the worry of my original disqualification.
A director we defended against a disqualification claim
Director Disqualification for trading to the detriment of creditors
Case 1 – Director disqualification for trading to the detriment of HMRC
Director Disqualified for 3 years by an undertaking agreed by the director.
Between 8 November 2018 and 1 February 2019, when it was insolvent The Disqualified Director caused or allowed The Liquidated Company to enter into transactions totalling £79,654 which were to the detriment of creditors in particular HM Revenue & Customs (HMRC) and to or for the benefit of a connected party.
- On 10 August 2018 HMRC issued The Insolvent Company with a Notice of Enforcement.
- On 23 October 2018 HMRC attended The Liquidated Company’s trading premises and stated that they intended to commence winding up proceedings; her co-director first contacted professional advisors for advice regarding The Insolvent Company’s financial position.
- Between 8 November 2018 and 1 February 2019 payments totalling £79,654 were made from The Insolvent Company’s bank account to her co-director; no payments were made to HMRC.
- On 22 February 2019 The Liquidated Company entered liquidation; unsecured creditors totalled £134,618 of which £80,618 was owed to HMRC.
- Between 23 October 2018 and 18 January 2019, when it was insolvent The Disqualified Director caused or allowed The Liquidated Company to enter into transactions totalling £70,355 which were to the detriment of creditors and to or for the benefit of a connected party.
- On 10 August 2018 HM Revenue & Customs (HMRC) attended The Failed Company’s trading premises and issued them with a Notice of Enforcement.
- On 23 October 2018 HMRC again attended The Liquidated Company’s trading premises and stated that they intended to commence winding up proceedings; her co-director first contacted professional advisors for advice regarding The Insolvent Company’s financial position.
- Between 23 October 2018 and 18 January 2019 payments totalling £70,355 were made from The Insolvent Company’s bank account to her co-director; no payments were made to HMRC.
On 22 February 2019 the Company entered liquidation; unsecured creditors totalled £134,618 of which £80,618 was owed to HMRC.
Case 2 – Director disqualification for making personal payments to herself and connected parties and trading to the detriment of creditors
Director Disqualified for 6 years by a director signed undertaking.
Between 30 March 2021 and 20 April 2021, after the company had sought insolvency advice on 29 March 2021, The Disqualified Director caused The Liquidated Company Limited to make payments to herself and other connected parties to the total £16,902, to the detriment of another creditor in that:
- On 29 March 2021 she held a meeting with an Insolvency Practitioner and concluded that the Insolvent Company was insolvent. She was also advised by them that no further payments should be made or authorised to any existing creditors
- On 06 April 2021 £2,956 was paid to her.
- Between 12 April 2021 and 20 April 2021, payments totalling £13,946 were paid out of the bank account. £10,545 was paid to a connected party and £3,401 to a connected company.
The outstanding creditor at liquidation was Christmas Decorators Limited for an amount of £32,369. The last payment to them was 04 January 2021.
Case 3 – Director disqualification for trading to the detriment for £41,000
Director Disqualified for 3 years by a signed undertaking of the director.
Between 24 June 2020 and 25 June 2020, The Disqualified Director caused The Liquidated Company to enter into transactions to the detriment of creditors by causing it to make payments amounting to £41,000 to a former director at a time when she knew that The Insolvent Company was insolvent and it was likely to cease trading.
- Between 08 April 2019 and 24 April 2020, The Disqualified Director’s co-director loaned IC a total of £43,000.
- When Covid-19 became prevalent in March 2020, the failed company business began to decline. This was due to the fact that 90% of The Liquidated Company business was with a single client who let holiday homes.
- On 15 May 2020, The Disqualified Director’s co-director resigned from his position.
- On 18 May 2020, The Insolvent Company received a Bounce Back Loan totalling £50,000.
- On 05 June 2020, The Director Disqualified signed The Insolvent Company annual company accounts, reflecting that the company was insolvent.
- Between 24 June 2020 and 25 June 2020, The Banned Director caused The Liquidated Company to make payments to the former director, totalling £41,000, to the detriment of The Insolvent Company other creditors.
- Between 15 July 2020 and 16 July 2020, the former director repaid £22,000 to The failed Company.
The dissolved company entered liquidation on 15 March 2021. The total amount owed to creditors was £142,077.
Case 4 – Director disqualification for trading to the detriment of HMRC
Director Disqualified for 6 years by an undertaking agreed by the director.
That on the 30 October 2016, at a time when The Director Disqualified knew or ought to have known that the Company was insolvent, he caused The failed Company to enter into a business agreement to transfer its business and assets to a connected company, which was to the detriment of The Insolvent Company’s creditors, specifically HM Revenue and Customs (HMRC). In that;
- On 22 September 2016, HMRC presented a Winding Up petition to the Court in respect of The Liquidated Company’s outstanding Value Added Tax and Pay As You Earn and National Insurance Contributions liabilities totalling £84,419 (including surcharges, penalties and interest).
- On 30 October 2016, an agreement was entered into for the transfer of all assets belonging to The Insolvent Company, which he valued personally by him, comprising business equipment at £6,000, goodwill at £5,000 and book debtors of £20,000 to the purchaser for the purchase price of £1.
- The Company’s last set of accounts for the year ended 31 July 2015 included fixed assets of £42,225 and debtors of £28,514.
- As part of the transfer agreement, the purchaser was to pay certain creditors of the failed company, specifically all monies owed to him including his director’s loan account of £6,000, rent arrears of £18,000 (the trading premises were rented by him personally), a bank loan of £11,000 (personally guaranteed by him) and a finance company loan of £6,000 (personally guaranteed by him), as scheduled in the agreement. The purchaser was also to take over the future liability from leased telephone equipment valued around £4,000.
- He stated The Insolvent Company ceased to trade in mid October 2016 when its bank account was frozen.
- The purchaser was a company which he was sole director of.
- Upon the petition of HMRC, a Winding Up Order was made against The Liquidated Company on 23 January 2017.
At the date of liquidation, The Insolvent Company had £nil assets and claims received totalling £91,720, of which £82,780 was due to HMRC (the amount since the presentation of the petition has reduced due to an assessed liability being replaced by a lower return) and £8,940 was due to trade and expense creditors which includes a claim from the finance company loan referred to above for £5,136.
Case 5 – Director disqualification for making payments after a winding up petition had been served
Director Disqualified for 8 years by a director signed undertaking.
Between 1 September 2019 and 13 January 2020, whilst insolvent and after a winding up petition had been served, The Director Disqualified caused The Liquidate Company to make payments totalling £170,332 to the detriment of creditors generally, in that:
- On the 31 March 2019 the reserves on the companies account were £611
- In August 2019, The Director Disqualified consulted insolvency practitioners with a view to preparing CVA proposals.
- In September 2019, a Winding up petition was presented against The Liquidation Company for an amount due of £144,864
- In October 2019, HMRC refused CVA proposals.
- Between 1 September 2019 and 13 January 2020, £58,877 was paid to The Disqualified Director. The payments were not in the ordinary course of business.
- During the same period cash was withdrawn from the company bank account amounting to £3,455
- During the same period The Banned Director caused or allowed The Insolvent Company to make payments to connected parties of at least £108,000.
- On 6 December 2019 the director approached an IP to request assistance in dealing with the financial affairs of the company and was advised to put the company in liquidation. The company ceased trading on 13 January 2019.
- On 13 January 2020, following the sale of company assets the company ceases to trade.,
- Following cessation of trade a further £59,000 was paid to connected parties.
- On 21 January 2020 notice was sent to all members resulting in voluntary winding up of the company on 17 February 2020 .
- At the date of the liquidation the director scheduled creditors in the Statement of Affairs totalling £366,692 which comprised of a liability to HMRC of £221,692 and two loans amounting to £146,000.
At the date of liquidation BD had an overdrawn director loan account of £260,000 declared unrealisable. No recovery has been made.
Case 6 – Director disqualification for making personal payments at a time when the company was insolvent
Director Disqualified for 5 years by a signed undertaking of the director.
Between 03 April 2020 and 08 October 2020, The Director Disqualified caused the failed company to make payments totalling £12,750 to himself and to the detriment of company creditors generally, at a time when he knew, or ought to have known, that The Liquidated Company was insolvent, in that:
- On 11 February 2020, The Disqualified Director signed an agreement, engaging an insolvency practitioner to assist in The Insolvent Company being placed into voluntary liquidation;
- On 26 March 2020, a national lockdown commenced, causing a significant downturn in The Liquidated Company trade;
- Between 03 April 2020 and 07 August 2020, payments totalling £6,000 were made from The Company in liquidation’s bank account to The Banned Director, in addition to those in respect of his salary, described as dividends;
- On 6 October 2020, insolvent company entered liquidation with total liabilities of £175,136 and a deficiency of £162,161;
- On 8 October 2020, a further £6,750 described as dividend was paid to The Director Disqualified .
Case 7 – Director disqualification for trading to the detriment and Covid loan offences
Director Disqualified for 5 years by a director signed undertaking.
Between 05 February to 29 April 2021, The Banned Director caused the company in liquidation to use funds received from a Local Authority The Covid relief grant to make payments totalling £39,077 for the benefit of an associated company, at a time when she knew or ought to have known that The Insolvent Company was insolvent, and which were to the detriment of The Insolvent Company’s creditors in that:
- On 17 July 2019, she viewed The Insolvent Company’s accounts for the year end 31 October 2018 which showed that the company had a deficit of shareholders funds of £10,988 and was informed by the company accountant that The Insolvent Company was insolvent.
- On or about 21 December 2020, The Insolvent Company applied for Local Authority The Insolvent Companyvid Relief Funding resulting in the company receiving a total of £43,832 between 05 January and 27 April 2021.
- On 4 January 2021, she consulted an Insolvency Practitioner in respect of the company in liquidation’s financial position and it was concluded that the company was insolvent.
- On 05 February 2021, the company in liquidation owned assets totalling £5,355 and owed outstanding liabilities of at least £125,097, being £64,861 in respect of outstanding VAT and £64,236 in respect of outstanding business rates.
- Between 05 February and 29 April 2021, the failed company made payments totalling £39,077 to an associated company in respect of outstanding rent, insurance and repairs. No payments were made in respect of The Insolvent Company’s outstanding VAT or business rates liabilities.
The Insolvent Company’s outstanding liabilities in the liquidation total £240,582 consisting of £69,268 owed to HMRC, £64,236 in respect of business rates, £50,000 owed to the bank, £15,564 miscellaneous trade liabilities and £41,514 claimed by the director. The company has no realisable assets.
Case 8 – Director disqualification for trading to the detriment and connected company payment offences
Director Disqualified for 8 years by a signed undertaking of the director.
Between 25 October 2019 and 23 July 2020, at a time when the company was insolvent and unable to pay its debts as and when due, The Disqualified Director caused or allowed payment of fees due to the company to be paid into the bank account of a connected company. As a result £114,074 was paid to the detriment of the general body of DCS’s creditors and to the benefit of the connected company:
- On 02 August 2019 HM Revenue & Customs (HMRC) wrote to DCS regarding PAYE/NIC arrears of £102,200;
- On 13 August 2019 he spoke to HMRC and stated that The Insolvent Company was unable to pay the arrears and he had arranged a meeting with the company in liquidation’s accountant and an insolvency practitioner;
- On 10 September 2019 HMRC wrote to the failed company to request payment of PAYE/NIC arrears of £108,283 within 7 days to avoid further recovery action;
- On 10 September 2019 and 17 September 2019, he advised HMRC that he was trying to raise funds in order to submit a time to pay proposal on behalf of The Insolvent Company;
- On 19 September 2019 the company in liquidation made its last payment to HMRC;
- On 25 September 2019, in accordance with a request from The Insolvent Company, a customer of the company in liquidationchanged its payments system so that future payments of fees due to The Insolvent Company would be made to a different bank account number belonging to a separate company of which he was a director;
- On 03 October 2019 HMRC informed him that they were going to begin winding up proceedings against The Insolvent Company;
- On 19 October 2019 HMRC filed a winding up petition against The Failed Company;
- On 04 December 2019 the first hearing of the winding up proceedings was adjourned until 29 January 2020 to allow ICand HMRC to reach a settlement. No settlement was reached;
- On 13 January 2020 he met with the Liquidators and it was resolved that The Insolvent Company would enter into voluntary liquidation;
- On 28 January 2020 The Insolvent Company was placed into voluntary liquidation;
- Between 25 October 2019 and 23 July 2020, the company in liquidation customer made 14 payments totalling £114,074 for fees due to The Insolvent Company into the bank account of the connected company, of which £80,933 was paid after The Insolvent Company had entered into liquidation.
He caused The Insolvent Company to trade to the detriment of HMRC in respect of PAYE/NIC from May 2018 to January 2020 resulting in PAYE/NIC liabilities totalling £139,279 (excluding surcharges) at liquidation:
- The Insolvent Company traded from October 2016 to January 2020 and began incurring PAYE/NIC liabilities from month 1 of the tax year 2018/19;
- The failed company incurred PAYE/NIC liabilities totalling £93,129 during the tax year 2018/19, of which £86,205 is outstanding. IC paid £6,924 towards PAYE/NIC for this tax year;
- The Insolvent Company incurred PAYE/NIC liabilities totalling £58,801 during months 1 10 of the tax year 2019/20, of which £53,074 is outstanding. The Failed Company paid £2,727 towards PAYE/NIC for this tax year and received employment allowance credits of £3,000;
- At cessation of trade HMRC was The Insolvent Company largest creditor with a debt of £139,279 for unpaid PAYE/NIC out of total debts of £206,329. The Failed Company also owed £40,390 to trade creditors, £16,846 to the bank and £9,814 to him;
Payments from The Insolvent Company current account between 22 April 2019 and 21 January 2020 totalled £553,842. There were no payments out of the company in liquidation’s business premium account at this time. During the same period, HMRC received payments of £2,727 towards The Insolvent Company PAYE/NIC liabilities, none of which appear to have been paid from The Insolvent Company bank accounts.
Case 9 – Director disqualification for trading to the detriment of HMRC
Director Disqualified for 3 years by an undertaking agreed by the director.
From at least 7 February 2020 onwards, The Banned Director failed to ensure that The Insolvent Company met its obligations to submit VAT returns and payments to HMRC, and caused or allowed the company to trade to the detriment and at the risk of HMRC, in that:
- The Company was registered for VAT with effect from 5 June 2019, and failed to submit any VAT returns to HMRC.
- The Company incurred VAT liabilities of at least £108,421.83 for the periods between 1 October 2019 and 30 September 2020. The Insolvent Company’s VAT return and payment for the period 1 October 2019 to 31 December 2019 fell due on 7 February 2020.
- On 13 November 2019, the failed company received its first income, being £90,000. On 19 November 2019, The Insolvent Company transferred £80,000 to a connected company, leaving insufficient provision for VAT. At no point thereafter did the company in liquidation retain sufficient funds to pay its VAT liability.
- Between 15 November 2019 and 24 November 2021, The Insolvent Company had total outgoings of £654,204.11, of which £650,371.24 was paid to the connected company (between 19 November 2019 and 28 September 2020), and no payments were made to HMRC.
The Insolvent Company’s statement of affairs, signed by him on 7 December 2021, records that the company had total liabilities of £114,038.00, comprising £109,034.00 VAT, £4,800.00 claimed by him, and £204.00 owed to the accountant.
Case 10 – Director disqualification for breach of hire contracts
Director Disqualified for 3 years by Court Order.
The Director Disqualified caused the Failed Company to breach the terms of the hire contracts between the hire company and JMC, dated 27 November 2017 to 12 January 2018, causing a loss to the hire company at liquidation of £14,493. In that:
- the Failed Company hired various items of gardening equipment from the hire company between 27 November 2017 and 12 January 2018.
- the Failed Company failed to pay the hire charges when they became due in accordance with the terms of the contracts
- the Failed Company failed to return the goods to the hire company in accordance with the terms of the contracts.
As a result, the hire company have made a claim in the liquidation for the sum of £14,493 in respect of outstanding hire charges and loss of the items as the location of the items is not known.
Case 11 – Director disqualification for paying off loan after an insolvency practitioner had been appointed
Director Disqualified for 3 years by a director signed undertaking.
On 09 December 2020, having sought insolvency advice and instructed an insolvency practitioner (IP) to commence the liquidation process on that same day, The Disqualified Director caused The Insolvent Company to pay £15,000 to a connected party as settlement of a loan, to the detriment of the remaining creditors, in that;
- In May 2020 The Insolvent Company applied for a £28,000 Bounce Back Loan (BBL). The funds from this were paid into the company in liquidation’s company bank account on 13 May 2020
- The Company applied for a top up of the BBL in the amount of £22,000 in December 2020 and these funds were paid into the company bank account on 09 December 2020
- On 09 December 2020 The Disqualified Director sought insolvency advice from an IP. At that meeting he instructed the IP to place the company into creditor’s voluntary liquidation
- On the same day £15,000 was paid out of the company bank account to a connected party
Other creditors excluding the BBL totalled £248,485 in JVU’s liquidation.
Case 12 – Director disqualification for paying herself £30,000 at a time when the company was insolvent
Director Disqualified for 5 years by an undertaking agreed by the director.
Between 19 October 2020 and 16 November 2020, The Banned Director removed £30,839 from the bank accounts of The Insolvent Company for her own benefit at a time when the Company had ceased trading and was insolvent, which was to the detriment of the company creditors, in that:
- the company in liquidation operated two franchises which were withdrawn by the franchisor on 01 October 2020. Therefore, The Insolvent Company was unable to trade.
- On 19 October 2020, she transferred £39,000 from the failed company bank account to her personal savings account.
- On 16 November 2020, she transferred a further £3,500 from The Insolvent Company Business Reserve account to her personal savings account.
- Between 20 October 2020 and 18 December 2020, she used £11,661 of this money to pay The Insolvent Company business expenses.
- She used the remaining £30,839 for her own personal benefit.
At liquidation, the company in liquidation had liabilities of £91,734 of which £59,697 was owed to the bank and £32,037 was owed to trade creditors.
Case 13 – Director disqualification for trading to the detriment of HMRC
Director Disqualified for 2 years by a a director signed undertaking.
Between 1 March 2020 and 5 May 2020, after the company had ceased to trade, The Banned Director caused The Insolvent Company to enter into transactions to the detriment of HM Revenue and Customs (HMRC)
- The company ceased to trade on 26 February 2020. Between that date and 5 May 2020 the company bank account received credits totalling £24,309 for completed work.
- Between 1 March 2020 and 5 May 2020 The Director Disqualified removed funds from the company bank account for his own benefit, in the sum of £21,000.
- Between 16 March 2020 and 6 April 2020 The Director Disqualified paid a total of £2,000 to his co-director.
By removing these funds from the company bank account the company became insolvent and was unable to pay the company tax liability of £63,331 at liquidation.
Case 14 – Director disqualification for making company payments totalling £45,000 whilst insolvent
Director Disqualified for 9 years by Court Order.
Between the 19 November and 23 November 2020, The Banned Director caused The Insolvent Company, whilst insolvent, to make payments totalling £45,000 to a connected party, to the detriment of the remaining company creditors who were owed £77,851 at liquidation
In that;
- The Banned Director has stated that the payments were made to the connected party, who was also the landlord of the trading premises, for rent arrears. The company in liquidation did not have a lease agreement on the business premises, just an informal arrangement with the connected party. The Disqualified Director informed the liquidator that the annual rent was £72,000 However, a lease agreement relating to the lessee of the business premises shows that the annual rent was £13,000.
- Accounts for the periods ended 31 May 2019 and 31 May 2020 show that The Insolvent Company was charged a total of £18,500 in rent
The bust company was insolvent when it made the payments to the connected party. Accounts made up to 31 May 2020 show that the company made a net loss of £37,763 and a deficit of £39,569 is showing on the capital and reserves. The company was also approximately £30,000 in arrears of VAT to HMRC.
Case 15 – Director disqualification for personal payments totalling £46,000 when the company was insolvent
Director Disqualified for 3 years by a director signed undertaking.
Between 16 October 2020 and 17 November 2020 when she knew or ought to have known that the company was insolvent, The Disqualified Director caused or allowed the company in liquidation to make payments benefitting herself of at least £46,697 over and above that to which she was reasonably entitled to as a creditor, and which were to the detriment of the company, in that:
- At 01 October 2020 the company was insolvent on a cashflow basis in that it was in arrears with a number of creditors and unable to pay its debts when due. On 14 October 2020 the failed company sought government financial assistance to make 18 employees redundant as it did not have the funds to do so.
- On 16 October 2020 the company made a payment of £15,000 to The Disqualified Director.
- On 20 October 2020 the Redundancy Payments Service were notified that a liquidator was to be appointed and that all 32 employees were to be made redundant on 26 October 2020.
- Between 20 October 2020 and 22 October 2020 it paid a further £37,000 to The Banned Director.
- On 26 October 2020 the company engaged an insolvency practitioner to prepare a statement of affairs and convene a meeting of creditors. the The failed company ceased trading and the employees were made redundant on the same day.
- Between 28 October and 2 November 2020, a further £15,500 was paid to The Director Disqualified
- On 17 November 2020 IC entered creditors voluntary liquidation. According to its statement of affairs, the company had an overall deficiency to creditors of £2,705,251.
- Between 16 October and 17 November 2020, a total of £202,532 was paid out of the company’s bank account, of which £67,760 was paid to The Director Disqualified , which benefitted her and another director.
Whilst The Banned Director and the other director were creditors of the company at the time of the payments, The Disqualified Director received approximately £46,697 more than she would have done had the payments been distributed to unsecured creditors proportionately. Therefore, these transactions were to the detriment of IC and its creditors.
Case 16 – Director disqualification for not safeguarding investor payments
Director Disqualified for 9 years by a signed undertaking of the director.
The Banned Director caused the Company to fail to provide goods and services or to safeguard investor monies.
- He caused the Company to use money obtained from investors, which the investors were told would be used to finance wind turbine projects in Scotland, for other purposes, including to finance property development projects for connected companies.
- All investor funds received by the Company were sent to the bank account of its parent company. A large proportion of those funds were spent on related property projects for the parent company or other connected companies, to which the investors obtained no benefit.
- He caused the Company to mislead investors in the marketing of the bonds for the Company.
- The Company employed a third party to advertise the bonds for the Company, through email advertisement, claims in information memorandums and an article appearing in a political and cultural magazine.
- Investors were advised that their investments were (a) government protected; (b) bonds were assets backed; (c) that a security trustee had been appointed to safeguard investor’s interests; and (d) that insurance had been obtained from a reputable insurance firm. None of those assertions were correct.
- At liquidation investors of the Company were owed at least £4,322,000.
- From 25 April 2016 until 7 February 2017, he acted as a director of the Company whilst an undischarged bankrupt, in that:
- He was made bankrupt on 10 august 2012.
- His bankruptcy was annulled on 7 February 2017.
He was an undischarged bankrupt in England and Wales during the entirety of 2016 when the Company raised investment funds.
Case 17 – Director disqualification for paying £91,000 to connected parties whilst insolvent
Director Disqualified for 2 years by an undertaking agreed by the director.
Between 02 September 2020 (the date the winding up petition was served) and 30 November 2020 (the date of his resignation) The Banned Director allowed The Insolvent Company to enter into transactions to the detriment of creditors by allowing it to make payments totalling £91,500 to connected parties at a time when The Disqualified Director knew or ought to have known The Failed Company was insolvent, in that;
- On 02 September 2020 a winding up petition was served on The Insolvent Company at the company’s registered office
- On 17 November 2020, The Banned Director allowed The bust Company to make a payment of £55,500 to a connected company
- From 07 October 2020 to 04 November 2020 The Director Disqualified allowed the insolvent company to make payments totalling £36,000 to a former employee of the company. These payments were £25,062 in excess of that to which the employee was entitled.
At liquidation there were 23 creditors with liabilities totalling £1,483,053 of which £700,000 to £900,000 is disputed by the directors. Of the £1,483,053, £267,500 was owed to the company in liquidation’s directors and £1,215,553 was owed to The Insolvent Company’ other creditors
Case 18 – Director disqualification for trading to the detriment of HMRC
Director Disqualified for 5 years by a director signed undertaking.
The Disqualified Director caused or allowed the company in liquidation to trade to the detriment of Her Majesty’s Revenue and Customs (HMRC) from 29 January 2018 to his resignation on 02 August 2018, in that:
- The Director Disqualified was a director of the company in liquidation between 27 May 2015 and 02 August 2018;
- in January 2018 the company sold its business and assets for £1,250,000;
- on 29 January 2018, the purchaser paid £750,000 of the purchase price to the company shareholder rather than to the company in liquidation;
- the sale completed on 31 January 2018 at which point the company had assets of £1,030,345. This included £469,533 owed to the company by associates but these monies were not repaid to the company before the liquidation;
- on 31 January 2018 the company had liabilities of £739,813 including at least £198,174 due to Her Majesty’s Revenue & Customs (HMRC). Additional HMRC liabilities of £300,776 had already accrued by 31 January 2018 and fell due for payment before liquidation, but no further payments were made to HMRC although they were IC largest creditor;
- between 29 January 2018 and The Banned Director’s resignation on 02 August 2018 payments of £492,395 were made from the company bank account, including a further £125,883 that was paid to or on behalf of the company shareholder and its associates, and a further £12,040 was paid out on its behalf by the purchaser;
- The Director Disqualified was an authorised signatory on the company bank account and his approval was required for payments made over £5,000;
The insolvent company went into liquidation on 20 September 2018 with assets of £55,378 and liabilities of £617,615, including £499,762 owed to HMRC. The liquidators have received no money from associated companies in the liquidation.
Case 19 – Director disqualification for trading to the detriment of the general body of creditors
Director Disqualified for 5 years by a signed undertaking of the director.
Between 02 December 2019 and 20 December 2019, as sole director of the company in liquidation, The Disqualified Director carried out transactions to the detriment of the general body of creditors when the company was insolvent, in that:
- On 11 October 2019 a statutory demand for £30,852.53 was served on the company in liquidation at its registered office.
- The Insolvent Company ceased trading in October 2019 following the loss of its sole contract.
- On 14 November 2019 a full and final settlement was agreed between the sole Customer and the company. A signed agreement dated 18 November 2019 gives the settlement as £122,500.00 to be paid to The Insolvent Company by 02 December 2019.
- On the same day a settlement figure from a finance company was provided, a liability which was personally guaranteed by The Director Disqualified .
- On 01 December 2019 the company in liquidation owed liabilities of at least £172,235.76:
- £101,735.59 – Trade creditors, including £99,443.25 owed to creditors who were suppliers to the company in liquidation, specified by the Customer.
- £56,096.57 – Finance owed to the finance company, personally guaranteed by The Director Disqualified
- £12,000.00 – a Connected Company, a company under common directorship.
- £2,403.60 – To The Director Disqualified, in respect of the Directors Loan Account.
- Funds of £122,313.88 were credited to the insolvent company’s account by the Customer on 02 December 2019.
- On 02 December 2019, at a time when The Banned Director knew no further income would be forthcoming to pay the outstanding liabilities, he made payments totalling £119,556.48 from the insolvent company’s account, comprising:
- £40,000.00 to The Disqualified Director, of which he states that £36,250.00 was in respect of dividends and salary.
- £20,000.00 for repayment of a personal loan to a connected party.
- £56,096.57 to the finance company, a liability personally guaranteed by The Disqualified Director.
- £1,444.80 to a Connected Company, a company which The Director Disqualified was a director of.
- £1,484.87 to the costs of trade and expenses of the company in liquidation.
- £530.24 for unknown purposes.
- On 17 December 2019 the finance company refunded £54,101.11 to the insolvent company’s account as the settlement figure had expired so was no longer valid.
- On 20 December 2019 a further payment of £53,600.00 was paid from The Insolvent Company’s account to The Banned Director. The Director Disqualified estimates that up to £4,000.00 was used to pay creditors of The Insolvent Company, with the rest used for personal expenditure.
On 22 April 2020 The Insolvent Company was placed into compulsory liquidation. Creditors have filed claims in the liquidation for £186,836.10 in total. Of this figure, £101,736.40 is claimed by creditors who were suppliers specified by the Customer.
Case 20 – Director disqualification for trading to the detriment of HMRC
Director Disqualified for 3 years by an undertaking agreed by the director.
From no later than 07 September 2016, The Banned Director failed to ensure that the company in liquidation made payments to HM Revenue & Customs (HMRC) as and when due in respect of its VAT liabilities. Consequently, trading was to the detriment of HMRC.
VAT
- According to HMRC’s records, following the commencement of trade in February 2016, the company in liquidation made late payment of VAT due in relation to the 04/16 quarter and part payment of the 07/16 quarter (due 07 September 2016) and no payments in respect of amounts shown as due in the returns filed for each of the 10 subsequent quarters, 10/16 to 01/19 inclusive.
- VAT arrears at the date of winding up on 19 December 2018 covered the part paid 07/16 quarter and the 10 consecutive VAT quarters from 10/16 (due 07 December 2016) to the 01/19 quarter inclusive.
- By the date of liquidation, HMRC’s VAT claim totalled £76,952.97 including surcharges of £6,128.06 raised in view of IC default and assessments of £10,856 raised in relation to the final 10/18 and 01/19 quarters.
Differential Treatment
- Of payments made out of the company bank account over the period 09 February 2017 to 11 April 2019, only £17,661.01 was paid to HMRC against accruing liabilities which totalled £92,662.45 by the date of liquidation. Further payments totalling £2,500 have been identified as being paid to HMRC during the same period, the source of these payments has not been identified.
HMRC are the single largest creditor in the liquidation, trade creditor claims totalling £21,684.76 in comparison.
Case 21 – Director disqualification for trading to the detriment of HMRC and incorrect VAT returns
Director Disqualified for 4 years by a director signed undertaking.
The Banned Director failed to ensure that the insolvent company properly accounted to HMRC for VAT on returns submitted on behalf of the company, causing HMRC to raise assessments of £167,709 plus interest of £9,902 and penalties of £89,541 for the 15 VAT periods 07/14 to 01/18 in that
- The insolvent company was registered for VAT from 1 June 2012 and operated invoice accounting and so claimed VAT back on the receipt of invoices.
- Between July 2014 and December 2017 purchase invoices from connected companies, on which VAT refunds had been claimed, remained unpaid after a six month period and no action was taken to either notify HMRC of this or correct the VAT returns as required under VAT rules.
Case 22 – Director disqualification for sale of assets to connected party
Director Disqualified for 5 years by a director signed undertaking.
Between 08 February 2021 and 13 May 2021 The Disqualified Director caused or allowed the company in liquidation to sell assets to a connected party, at a time when the company was insolvent. The assets were sold to the connected party for less than their value and their sale was to the detriment of The Insolvent Company’s creditors who were owed £231,286 at liquidation, in that:
- The insolvent company was receiving letters from its bank from at least 22 February 2021 stating that the company bank account was overdrawn and that several direct debit payments had failed, indicating that she ought to have known that the company could not pay its creditors as and when they fell due.
- The Insolvent Company’s professionally prepared accounts for Year-End 30 September 2019, which were approved by Co-Director on 07 May 2020, recorded shareholder’s funds as (£103,115), indicating that the directors ought to have known the company was balance sheet insolvent.
- The Company’s sales invoices show that, between 08 February 2021 and 13 May 2021, stock valued on those invoices at £22,743 was sold to the connected party for £5,976
- On 30 April 2021 a sales invoice shows that The Company agreed a sale of 2 items of plant and machinery and a motor vehicle to the connected party for £9,045, analysis of the depreciation register for the company in liquidation shows that at the date of the sale these assets had a combined total value of £39,606.
In respect of the above, the loss to The Company was £47,328
Case 23 – Director disqualification for trading to the detriment of HMRC
Director Disqualified for 4 years by an undertaking agreed by the director.
Between 1 March 2020 and 5 May 2020, after the company had ceased to trade, The Disqualified Director allowed The Insolvent Company (IC) to enter into transactions to the detriment of HM Revenue and Customs (HMRC).
- The company ceased to trade on 26 February 2020. Between that date and 5 May 2020 the company bank account received credits totalling £24,309 for completed work.
- Between 1 March 2020 and 5 May 2020 The Disqualified Director allowed a total of £21,000 to be paid to her co-director from the company bank account.
- Between 16 March 2020 and 6 April 2020 The Director Disqualified received a total of £2,000 from the company bank account.
By removing these funds from the company bank account the company became insolvent and was unable to pay the company tax liability of £63,331 at liquidation.
Case 24 – Director disqualification for trading to the detriment of creditors but to the benefit of directors.
Director Disqualified for 9 years by Order at trial.
That between 12 May 2020 and 29 October 2020, The Director Disqualified caused The Insolvent Company to enter into transactions totalling £32,434 which were to the detriment of creditors and to the benefit of the directors of The Company.
The payments to the directors followed the introduction of funds into The Insolvent Company’s bank account by way of a Bounce Back Loan with the express intention of providing economic benefit to The Company’s business. The Disqualified Director caused The Company to breach such Bounce Back Loan terms and remove those funds for the benefit of the directors of The Company at a time when The Company was insolvent. In that:
- In the week of 09 March 2020, The Insolvent Company’s directors held a meeting with The Company’s accountants to discuss The Company’s financial position.
- On 16 March 2020, The Company’s directors held a meeting with an Insolvency Practitioner and at this meeting it was determined that The Company was insolvent.
- On 11 May 2020 The Insolvent Company applied for a Government Guaranteed Bounce Back Loan and received £38,000 on 12 May 2020.
- Between 12 May 2020 and 29 October 2020 The Banned Director received payments annotated ‘Loan’ totalling £20,198.
- Between 12 May 2020 and 29 October 2020 the co-director, a director of The Insolvent Company, received payments annotated ‘Loan’ totalling £12,236.
- Between 26 May 2020 and 27 August 2020, The Insolvent Company received funds through the Coronavirus Job Retention Scheme totalling £21,557.
- Between 26 May 2020 and 29 October 2020, the directors of The Insolvent Company, its only employees, received payments annotated ‘Salary’ totalling £16,629 and payments annotated ‘Expenses’ totalling £1,394.
- Between 12 May 2020 and 29 October 2020, The Insolvent Company made payments to recipients other than the directors totalling £7,975. Of the £7,975, payments to HMRC in respect of PAYE totalled £5,145 and payments in respect of administrative expenses totalled £2,830.
- The Company did not actively trade during the period 12 May 2020 to 29 October 2020.
- On 29 October 2020 The Insolvent Company entered into creditor’s voluntary liquidation with assets of £3,420 and liabilities of £338,872. Of the liabilities totalling £338,872, Trade and Expense creditors totalled £162,669, monies owed to the directors totalled £148,558, preferential liabilities totalled £15,314 and liabilities owed to HMRC totalled £12,331.
During the period 12 May 2020 to 29 October 2020, payments to directors totalled £50,457, payments to HMRC in respect of PAYE totalled £5,145 and payments in respect of administrative expenses totalled £2,830. No payments were made to the trade and expense creditors as recorded in the Statement of Affairs of The Insolvent Company.
Case 25 – Director disqualification for trading to the detriment of HMRC
Director Disqualified for 3 years by a signed undertaking of the director.
From at least 21 December 2015 to 07 November 2018, the date of Liquidation, The Disqualified Director failed to ensure The Company submitted accurate returns and make payments as and when they fell due, meaning The Company traded to the detriment of HM Revenue and Customs (hereinafter referred to as HMRC) so that at liquidation, The Insolvent Company had an outstanding liability in respect of VAT of at least £154,032.48.
- The Company voluntarily registered for VAT with effect from 15 August 2013 to submit quarterly monthly returns;
- As at 20 December 2015, The Insolvent Company had submitted returns, incurred charges and made payments so that HMRC was owed £18,097.82 with regards to VAT;
- Returns were submitted for eleven periods, 11/15 to 05/18, totalling £89,338.52, charges totalling £13,334.49 were applied due to late payment. Payments totalling £90,892.96 were made against the liability so that £29,877.87 remained outstanding;
- An Officers Assessment covering periods 11/15 to 05/18 was applied to the ledger, due to an undeclaration of VAT due, on 26 September 2018, totalling £70,783.00 of VAT and £2,905.19 of interest. No objection was raised by him and no payment was made against this liability.
- Assessments were raised for the final period of trading (08/18 and 11/18) totalling £46,209.00 and additional charges raised totalling £4,257.42. No payments were made against this liability so as at the date of Liquidation £154,032.48 was outstanding.
Comparative Treatment.
- Between 01 September 2015 and 31 May 2018, according to CIS returns, IC had income of at least £867,367.00; whilst
- HMRC’s VAT ledgers show that between 01 September 2015 and 07 November 2018, £100,892.96 was paid to HMRC in respect of VAT.
Case 26 – Director disqualification for lease infringements
Director Disqualified for 9 years by a signed undertaking of the director.
The Banned Director, whilst sole appointed director of The Company, breached his duties as a director of The Insolvent Company by causing and/or allowing The Company to vary the lease of the common part of the ‘C’ lease on 30 March 2015, for no consideration and in doing so removed IC right to receive any rent from ‘D’
- Under the terms of the C lease, dated 23 May 2013, D were required to pay an annual rent of £50,000 to The Insolvent Company, increasing to £100,000 I 2018 and increasing at a pre-determined rate every following five years.
- The Disqualified Director caused and/or allowed The Insolvent Company to remove its right to receive any rent from D resulted in a reduction in income at a time when The Disqualified Director knew that, as per their lease agreements, the company in liquidation’s investors could require the Company to buy back their leasehold interest in their units at Hotel within the next five months. At the same date The Insolvent Company did not hold a bank account; had forsaken funds of £4,781,000, due from a connected company; had made payments totalling £11,051,505 from funds received totalling at least £11,051,609, including a balance of £3,522,012 paid to two connected companies, £1,200,000 of which was due for repayment but not until January 2023.
Case 27 – Director disqualification for company record offences
Director Disqualified for 2 years by a signed undertaking of the director.
From 1 February 2020 The Director Disqualified failed to ensure that The Company maintained or preserved all accounting and administrative records or alternatively has failed to deliver up all such that did exist. As a result, it is not possible to ascertain:
- Whether all income has been disclosed in the absence of full daily taking records and receipts/invoices;
- The reasons for, and ultimate recipients of, cash withdrawals totalling £56,820 between 12 May 2020 and 6 January 2021;
- The full and true extent of any moneys due to from The Director Disqualified where his Director Loan Account balance was shown in the 2020 accounts to be £63,046 and he claimed £63,600 was due at liquidation;
- Whether all assets have been disclosed;
- The dates between which The Insolvent Company traded;
- The accuracy of the statement of assets and liabilities;
Case 28 – Director disqualification for making payments whilst knowing the company was insolvent
Director Disqualified for 4 years by an undertaking agreed by the director.
Having attended a meeting at Insolvency Practitioners on 31 January 2020 and been appointed as the sole director of the company on the same day, The Banned Director at a time when she knew or ought to have known that the company was insolvent failed to ensure the payments made from the Company’s bank account were for the benefit of all creditors, namely HM Revenue & Customs (HMRC). In that:
- As of 31 January 2020 being the date of her appointment as the sole director the liability due to HMRC in relation to PAYE was at least £180,509 and £42,916 in relation to VAT.
- In the knowledge that the Company was trading whilst insolvent after the meeting with RPG, she allowed payments in excess of £24,062 to be made from the Company’s bank account that was to the detriment of creditors and made for the benefit of:-
- Co-Director – £8,262
- An associate – £15,800
Further between 24 February 2020 and 14 April 2020 she used or allowed the use of the Company bank account to pay for items of a personal nature amounting to £10,787
Case 29 – Director disqualification for trading to the detriment of HMRC and VAT offences
Director Disqualified for 5 years by a director signed undertaking.
From at least 30 July 2017, the date upon which The Banned Director knew, or should have known, that The Company turnover exceeded the Value Added Tax (VAT) threshold, until 14 November 2019, the date upon which The Insolvent Company entered into Creditors Voluntary Liquidation (Liquidation), he caused or allowed The Insolvent Company to trade to the detriment of Her Majesty’s Revenue and Customs (HMRC) in respect of VAT. As at the date of liquidation The Company’s VAT liabilities totalled £59,271 and The Insolvent Company’s overall liabilities totalled £61,894. In that:
- HMRC’s guidance on VAT registration details that once a limited company’s turnover exceeds £85,000 the limited company’s director(s) must register the limited company for VAT returns and payments.
- On 30 July 2017, he approved the annual accounts of The Insolvent Company for the year ending 31 October 2016. These accounts detailed The Company’s annual turnover as being £170,710, £85,710 higher than the VAT threshold at which stage he should have registered the company in liquidation for VAT.
- He registered The Company for VAT on 16 July 2018.
- On 19 November 2018 HMRC issued a penalty assessment, under Schedule 41 of the Finance Act 2008 (S.41 FA 2008), against The Insolvent Company totalling £17,932 for his failure to register The Company for VAT upon his becoming aware that The Insolvent Company’s turnover had reached the VAT threshold. As at the date of Liquidation this penalty remained due in full.
- Between 18 February 2019 and 11 June 2019, The Company filed VAT returns for the VAT periods ended: 07/18, 10/18, 01/19 and 04/19. These VAT returns declared VAT liabilities due to HMRC totalling £36,341. HMRC raised a further assessment of VAT, and an associated assessed surcharge, due for the VAT period ending 07/19 totalling £4,544 and £454 respectively. As at the date of Liquidation The Company had made no payments towards its VAT liabilities.
- As at the date of Liquidation The Insolvent Company’s liabilities totalled £61,894 of which £59,271 was due for VAT.
Comparative Treatment
- Bank Statements
- The Insolvency Service’s analysis of The Insolvent Company’s bank account detail that between 30 July 2017 and 14 November 2019, the date upon which The Company entered into Liquidation, The Insolvent Company made payments totalling £553,407. The Company made no payments towards its VAT liabilities.
- Of those payments made by The Insolvent Company between 30 July 2017 and 14 November 2019, payments totalling £63,609 were made to him.”
Case 30- Director disqualification for making payments to connected parties whilst insolvent
Director Disqualified for 5 years by a signed undertaking of the director.
Between 08 February 2021 and 13 May 2021 The Disqualified Director caused or allowed The Insolvent Company to sell assets to a connected party at a time when The Failed Company was insolvent. The assets were sold to the connected party for less than their value and their sale was to the detriment of The Insolvent Company’s creditors who were owed £231,286 at liquidation, in that:
- The Company was receiving letters from its bank from at least 22 February 2021 stating that the company bank account was overdrawn and that several direct debit payments had failed, indicating that he ought to have known that The Company could not pay its creditors as and when they fell due.
- The Insolvent Company’s professionally prepared accounts for Year-End 30 September 2019, which were approved by him on 07 May 2020, recorded shareholder’s funds as (£103,115), indicating that the directors ought to have known the company was balance sheet insolvent.
- The Insolvent Company’s sales invoices show that, between 08 February 2021 and 13 May 2021, stock valued on those invoices at £22,743 was sold to the connected party for £5,976
- On 30 April 2021 a sales invoice shows that The Company agreed a sale of 2 items of plant and machinery and a motor vehicle to the connected party for £9,045, analysis of the depreciation register for The Insolvent Company shows that at the date of the sale these assets had a combined total value of £39,606.
- In respect of the above, the loss to The Insolvent Company was £47,328.
Director Disqualification Services
- Common allegations of misconduct
- Compensation orders
- Consequences of disqualification
- Dealing with early enquiries from the Insolvency Service
- Disqualification in the Magistrates court
- Disqualification undertakings
- Public interest winding up petitions and disqualification
- Remain a director despite disqualification ban
- Section 16 letters
Talk to our team
- Speak in confidence
- No obligation quotation
- Expert advice from a friendly team
Case studies
FWJ takeaway
Guide
Guide
2 minute read
Directors Duties: Your Guide
Blog
4 minute read
Director Disqualification & the Finance Act 2024
Guide
4 minute read
Company Directors Disqualification Act – CDDA 1986 Guide
Guide
12 minute read
Director disqualification and bounce back loans
Tips booklet
Tips booklet
Tips booklet
Tips booklet