The sole director of a web hosting provider and the mother and son owners of an import company have learnt the hard way that neglecting to pay VAT, or submitting false returns to HMRC, is not the best way to run a business.
Mr Keith Hawker, the sole director of Mitcham-based web hosting company Ontinuity Ltd, has ‘logged-off’ the Companies Register for the next 8 years, after being disqualified for failing to deal with his company’s affairs, and diverting money for his personal benefit.
The director disqualification, which is the result of an Insolvency Service investigation, prevents Mr Hawker from acting as a director or in any way managing or controlling a company until May 2019.
Failure to honour a ‘time to pay’ agreement
An Insolvency Service investigation found that Ontinuity Ltd had entered into company liquidation on 27 February 2013, with an outstanding tax liability of £81,856. The liability dated back to the date the company commenced trading, with Mr Hawker neglecting to pay HMRC a penny during this time.
Prior to the liquidation, Mr Hawker (59) had negotiated a time to pay agreement with HMRC to settle the company’s tax liability. However, he failed to honour this agreement, and instead diverted £194,268 to an associated company of which he was the director and majority shareholder before the company was placed into a creditors voluntary liquidation.
Welcoming the disqualification, a spokesperson for the Insolvency Service, said: “The Insolvency Service will rigorously pursue company directors who seek to benefit themselves ahead of their creditors by extracting company funds when others are not being paid.
“Limited liability protection is only available to those who comply with the obligations as company directors. If those obligations are ignored, that protection will be withdrawn.”
20-year disqualifications for import directors
In the second of our tales of two companies that clearly underestimated the importance of meeting their obligations to HMRC, we meet Frederick Hawkes and his mother Janis Hawkes, the directors of a Swansea-based import company.
The pair have been disqualified from acting as company directors for a combined period of 20 years for submitting annual financial accounts containing false information. They also submitted false VAT returns to HMRC.
Falsifying company accounts
F G Hawkes Limited was incorporated on 2 March 1987, and traded as an importer of plywood and sheet metals, as well as becoming involved in the rental of holiday villas. On the 3 October 2001, the company entered administration with a creditor deficiency of over £26million.
The subsequent Insolvency Service investigation into the company’s affairs found that Mr and Mrs Hawkes signed the annual accounts for 2009 and 2010, knowing the information they contained was false.
The investigation also revealed that for the quarters ending April 2010 and April 2011, the mother and son directors caused F G Hawkes to submit false VAT returns that led to an underpayment of at least £1,518,539. In addition to the lengthy disqualifications, the deceitful duo were also ordered to pay court costs of £16,750 by 29 July 2015.
Directors must meet their statutory obligations
Commenting on the disqualifications, Sue McLeod of the Insolvency Service, said: “These disqualifications send a clear message to directors that they have statutory obligations.
“The signing of documents knowing they contain misleading information which may be relied upon by third parties, and submitting false VAT returns is serious misconduct, which the Insolvency Service will investigate with a view to removing you from the market place.”
In this case the directors received disqualifications for false accounting and not honouring an HMRC Time to Pay arrangement. If your company has done everything right but is struggling to pay an HMRC Time to Pay arrangement then call us immediately on 0800 074 6757 as we can usually help.
Written by: Mike Smith