Company directors do not have carte blanche to act and behave as they wish. Limited liability is a privilege that comes with certain responsibilities. Failure to meet your legal obligations as a company director is punishable by fines, director disqualifications of up to 15 years, and personally liability for a proportion of the company’s debts.
In this post, we‘re going to take a look at a number of company directors who have been handed disqualifications in the past couple of weeks. If you want to steer clear of a director disqualification, these are the typical behaviours to avoid.
Restaurant boss banned for fiddling cash takings
The director of a Turkish restaurant in Borehamwood has been disqualified from acting as a company director for 11 years for deliberately failing to ensure his company accounted for VAT and corporation tax.
An HMRC investigation found the restaurant owner had been under recording the restaurant’s cash takings by as much as £1500 per week and had knowingly signed off accounts that understated the company’s turnover.
On liquidation, the company owed in excess of £220,000 to HMRC in unpaid VAT, PAYE, National Insurance contributions and corporation tax.
Security director banned for third party payments
The boss of a security company flouted his legal obligations to act in the best interests of the company was subsequently handed a 5 year disqualification. An Insolvency Service investigation found the company had made payments totalling £314,588 to third parties.
Despite failing to make VAT payments to HMRC, the company paid a vehicle auction house £164,830, along with further payments in excess of £114,000 to another third party. The security owner sought insolvency advice in January 2014, but on the same day made another payment to a third party totalling £34,447. He also failed to deliver up company books and records to explain these payments.
Crane company boss takes insolvency lightly
The risks of continuing to trade while insolvent have been highlighted by the director of a crane company who continued to trade for 4 years despite having liabilities of £77,036.
HMRC was owed in excess of £18,000 in VAT, corporation tax and National Insurance contributions and at least 6 creditors were pressing the company for payments. There was also a £3,933 county court judgement against the company.
An Insolvency Service investigation also found the company had written 17 cheques, worth a total of £8,161, that bounced, and 21 direct debits had been rejected worth £6,770. By continuing to trade, the company’s liabilities increased by at least £26,000, earning the director a 6 year ban.
Fast food franchisee guilty of fast practices
The director of a well-known fast food franchise has been disqualified from acting as a director for 7 years for playing hard and fast with the rules. The sandwich shop boss failed to deal with the company’s taxation affairs for its entire operation, leading to an HMRC liability of at least £166,286.
An Insolvency Service investigation found the director had not submitted any VAT returns, using the unpaid tax as working capital. Once this oversight was identified, the director did nothing to bring her tax affairs up to date or make the correct payments in the future.
As the company’s accounts were not delivered up, it’s impossible to identify the reason for payments totalling £612,432 from the company’s bank account, or what happened to assets worth £87,371. At the time of liquidation, the franchise had liabilities of at least £169,785.
Get expert assistance today
If you have concerns about wrongful trading or need advice on personal matters arising from an insolvent company, call 08000 746 757, email: [email protected] or speak to our senior consultant Mike Smith on 07912 344 394 for a confidential consultation.