HomeFWJ TakeawayDirector disqualification claimsCommon reasons for disqualificationWhat is the most common reason for director disqualification?

There are many grounds which give rise to disqualification as a director - but the most common by far relate to non payment of taxes to HMRC by the company. But non payment does lead to automatic disqualification - and our team has an excellent success rate in defending these types of claims. Let us help you.

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

Our team at Francis Wilks & Jones

We have been defending directors from disqualification since we set up business in 2002. We have helped 100’s directors in that time. We are the leading UK legal experts in this area of the law and can help with regard to any allegation of misconduct made against a director.

  • Stephen Downie is the partner who heads up our director disqualification team. As well as being a brilliant lawyer, Stephen is also a qualified accountant with particular expertise tax, accounting and misuse of company assets. He previously worked for the Insolvency Service as well, giving him a valuable insight into how they work and run disqualification cases.
  • 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.
  • Doug McEvoy is an associate at FWJ with a wide range of disqualification expertise, most recently defending many directors from Bounce Back Loan, tax allegations, trading to the detriment, trading to the detriment and other claims. He also helps defend directors from associated liquidator claims.

Common reasons for disqualification

1. Tax and HMRC offences

The most common reason for director disqualification historically related to non-payment of taxes – or Crown debts as they are often referred.

This means a failure by the company during its trading life to pay its taxes to HMRC such as

  • VAT;
  • PAYE;
  • NIC; and
  • corporation tax.

More specifically the way that these director disqualification proceedings are worded is on the basis that the company “traded to the detriment” of HMRC and preferred other creditors of the company to the HMRC.

The claims are pursuant to section 6 of the Company Director Disqualification Act 1986.

  • It is often alleged that other parties (i.e. trade creditors and suppliers) were paid in priority or preference to the HMRC during a set period of the company’s trading (normally in the lead up to liquidation).
  • This is very common in many instances where companies enter into liquidation because the directors often pay trade suppliers rather than the HMRC – who are effectively an involuntary creditor of the company.
  • Trading to the detriment of HMRC is a director disqualification offence which can in turn lead to a finding of unfitness.

However, there are various defences which can be raised in respect of allegations of trading to the detriment of HMRC and at Francis Wilks & Jones we have an expert team of director disqualification legal advisers able to assist in this often complex financial area. Indeed, the team also boasts Stephen Downie, a partner at Francis Wilks & Jones who is an also an accountant and an expert in this field.

2. Bounce Back Loan offences

There have been a huge number of Bounce Back Loan disqualification orders following the pandemic. Our team can help you defend these – and we would recommend if you do face this type of claim – to read our free Bounce Back Loan disqualification guide – or simply call us today

However – as there is only a 3 year time limit to bring claims form the date of company liquidation – it is likely these will start to reduce soon

3. Accounting offences

Failure to file accounts or maintain them properly can lead to a disqualification order. These are often wrapped up with HMRC related claims. Whatever the background – we are able to help.

4. Misappropriation of assets

Misuse of company assets, or allegations of fraud are serious. If you find yourself facing anything like this – you should call us immediately.

5. Trading to the detriment of creditors

Often this is related to non payment of HMRC and tax – but it can relate to any creditor of the company – when a decision was made to pay one creditor in preference to another. This is not allowed.

6. Trading whilst insolvent

If you know or ought to have know the company is insolvent – and still kept trading – this can lead to a director disqualification order being made. However, there are defences which can be used to defeat these claims – and our team is here to help.

7. Technical offences

This is the description used as a “catch all” for the more unusual allegations of misconduct – from not taking an active role in the company, SIPP and pension offences, tenancy deposit offences, immigration offences and a range of other lesser known allegations. But don’t worry – our team has experienced them all.

Francis Wilks & Jones is the county’s leading firm of director disqualification solicitors. We are experts in what we do with a combined 75 years’ experience in director disqualification claims. Contact one of our friendly director disqualification solicitors now for your confidential consultation.

If there was ever a star rating for law firms, Francis Wilks & Jones would score five stars plus. Professional and pro-active, they were able to understand my problem quickly, provide expert advice, outline a solution and put it into place with a successful outcome. I should have gone to them sooner

A client we successfully defended in director disqualification and insolvency related proceedings

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