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Health and Safety and the Duties of Directors

Health and Safety and the Duties of Directors

Company Fines and Director Sentenced After Carrying Out Unregistered Gas Work

The Duties of Directors are many and varied, and none are more important than those which relate to complying with Health and Safety Regulations. This article looks at a case where the company involved was fined £6,000, whilst the director (and his son) received community service sentences, with curfews, for carrying out unregistered gas work, and, therefore not complying with his duties as a director.

The Background to This Case

Mr Nigel Murray (‘the Director’) of N Murray and Sons Ltd (‘the Company’) has been fined and sentenced after conducting gas work at a domestic property in Mount Pleasant, Maldon without being gas safe registered.

The Company had been contracted in May 2014 to install two boilers at two domestic properties in Essex. Following the boilers being fitted, complaints had been made to the Gas Safe Register.

Gas Safe Register inspectors subsequently confirmed that the gas appliances installed by an employee of the Company were considered to be “at risk” and required immediate work to ensure the safety of the occupiers of the properties.

An investigation by the Health and Safety Executive (HSE) found that the Director of the Company had sub contracted gas installation work to his son who he knew was not Gas Safe Registered. It was also found that he was aware that Grant Murray (son of the Director) was not competent or gas safe registered but allowed the work to be completed.

The Consequences of Failing to Adhere to the Duties of Directors

The Company pleaded guilty to breaching two charges of Regulation 3 (2) of the Gas Safety (Installation and Use) Regulations 1998.

The company has been fined £6000.

  • Nigel Murray, the Director, pleaded guilty to breaching two charges of Section 37 of the Health and Safety at Work etc Act 1974 and has been sentenced to a six-month community order and a 7pm – 5am curfew for four months.
  • Grant Murray pleaded guilty to breaching two charges of Regulation 3 (1) of the Gas Safety (Installation and Use) Regulations 1998 and he has been sentenced to a 12-month community order and a 7pm – 5am curfew for six months.

Comment From the Health and Safety Executive

Speaking after the hearing ,HSE inspector Edward Crick said:

“Gas Safe Registered engineers are regulated and have to ensure they can prove they are competent. This safe guard is removed when people choose not to register which is highlighted in this case, where the individual placed people at risk of harm in their homes.

“It is important that anybody who has gas work carried out checks their engineer is carrying a valid gas safe registered identification card. They should also check online or call Gas Safe Register to confirm they are competent to carry out the work.”

Our Comment on this Duties of Directors Case

Had Mr Murray taken the time to consider the capabilities of his son, he could have avoided the sanctions imposed on him by the HSE.

The case is a reminder that compliance with Health and Safety Legislation is a statutory requirement for Directors and that a failure to observe such duties can result in fines and community orders – prison sentences are also possible for the most serious cases – for a defaulting Director. Every worker has the right to work in a safe environment, and this case shows just how seriously the authorities take non-compliance when it comes to Health and Safety and the Duties of Directors

It is also a salutary reminder of the criminal law enforcement action the HSE will take against Directors if there is a failure to comply and that Company Directors will be pursued personally in respect of Health and Safety breaches.

As solicitors specialising in the area of regulatory compliance, we are well used to dealing with the tactics and strategy of defending such cases, to the best advantage of the Company and its Directors. We are also experienced in working with the insurers for the Director and/or the Company in such cases.

Contact us for Help and Advice Regarding the Duties of Directors

If you have any questions regarding your duties as a Company Director under Health and Safety legislation or more generally, and the effect of non-compliance in any case, please contact us or call us today on 0121 200 7040 for a FREE, no obligation initial chat.

Regulatory Problems – HMRC and AWRS

Regulatory Problems – HMRC and AWRS

Alcohol Wholesalers now need to be Registered. What Regulatory Disputes and Problems will this cause? How to deal with HMRC.

Alcohol traders dealing in wholesale now need to be registered with HM Revenue & Customs. This transformation of the wholesale alcohol industry is brought about by the need to combat inward diversion fraud costing the public purse up to £1.5 billion annually.

HMRC are now implementing the Alcohol Wholesalers Registration Scheme (“AWRS”) from April 2017, and the feedback from traders is that of severe disruption and uncertainty within the market place.

All existing alcohol traders must have applied for approval by 31 December 2015.  All businesses intending to trade within the wholesale alcohol market must obtain approval before making any wholesale supplies. Failure to do so may result in the implementation of significant penalties and you may be deemed to be trading without approval.

This article looks at the regulatory disputes and problems that can arise from failure to comply with the new rules and regulations and what trade buyers need to do when dealing with HMRC.

Regulatory Problems and Disputes

Alcohol Wholesalers Registration Scheme

The Regulatory Problem with Alcohol Wholesalers

The Exchequer loses up to £1.5bn annually to inward diversion fraud.  This is essentially the release onto the UK domestic market of duty-unpaid alcohol products.  This fraud is widespread and highly organised often involving multiple parts of the supply chain.

The difference between duty-paid and duty-unpaid products can be significant.  The release of duty-unpaid alcohol products presents a significant price advantage to the fraudster and the illicit profits to be made are large.

This trade erodes tax revenues and puts law abiding traders at a huge disadvantage in the market place. It is for this reason that AWRS is being implemented to address this regulatory problem.

The New Law: Alcohol Wholesaler Registration Scheme (‘the scheme’)

The new law is to be implemented by way of a change to the Alcoholic Liquor Duties Act 1979 (‘ALDA’).  Section 6A of that Act is to be amended to usher in the new regime.  Further, the Wholesaling of Controlled Liquor Regulations 2015 will come into force in April 2017.

Those Regulations contain the detail of the approval and registration requirements that are at the heart of the new regime.

The Scheme will regulate the ‘wholesaling of controlled liquor’ and other ‘controlled activities’.  In practical terms this means:

  1. Selling ‘controlled liquor’ wholesale
  2. Offering or exposing controlled liquor for wholesale
  3. Arranging in the course of a trade or business for controlled liquor to be sold wholesale

It is important to note that there are no de minimis limits.  Therefore, all business to business vendors of duty-paid alcohol will have to be authorised and registered pursuant to the Scheme.  The new regime is not intended to capture sales from retailers to the public.  The legislation also provides an ‘incidental sale’ defence for those retailers that have made a wholesale sale without the requisite knowledge or intention.

The Application process follows the ‘fit and proper’ test and can be made via the HMRC website.

It is thought that up to 20,000 businesses will be affected by this change in the law with severe penalties for breaches.

New Criminal Offence: Trade Buyers

When the Scheme comes into force in April 2017 it will be a criminal offence for a ‘Trade Buyer’ to purchase duty-paid alcohol from unapproved wholesalers.

A ‘Trade Buyer’ is ‘someone who purchases alcohol from a wholesaler to either sell on to trade, or to sell to private individuals, i.e. a retailer’.

The penalties for this breach will be custodial sentences, fines, seizure of goods and potential removals of licence.

What to do to avoid Regulatory Disputes and Problems

The most obvious point to make is that enhanced due diligence and record keeping will be necessary.  Traders must be absolutely sure who they are dealing with and what their status is.

HMRC have produced Excise Notice 2002 as a practical guide to the scheme.

In the event that an application for approval is rejected, or conditions are attached to any such approval or that penalties are applied, then Traders will have a right to appeal to the First Tier Tax Tribunal.

The immediate practical problem for traders is that if an application for registration is refused a trader will have to cease making wholesale supplies immediately.  A trading business is effectively dead during the period of time it takes for the Tax Tribunal to determine the matter.

It is therefore imperative that advice is sought through the registration application process to ensure that HMRC comply with their obligations.  Where HMRC’s decision making processes are defective, Judicial Review proceedings may be available with interim measures such as injunctions to enable to the trader to continue to stay in business pending the determination of the matter by the Tax Tribunal.

If you are a trade buyer and you are encountering difficulties understanding or complying with the new rules and regulations, contact us or call us on 0121 200 7040. Our regulatory compliance solicitors will be happy to discuss and advise on your regulatory problems, and the initial conversation is free.

Director Disqualification and Prison for Safety Failings

Director Disqualification and Prison for Safety Failings

8 Month Prison Sentence Plus 7 Year Director Disqualification After Safety Failings.

The Health and Safety Executive (“HSE”) has issued a press release detailing its investigation into the conduct of Mr David Gordon Stead (‘Mr Stead’), a director of a construction company. Mr Stead received an 8 month prison sentence and a 7 year director disqualification for safety failings at his construction company. This article looks at the details of the case and highlights the serious consequences of non-compliance with the relevant regulations.

The Background to this Regulatory and Director Disqualification Case

Mr Stead was investigated by the HSE, who had received a report on his conduct from a third party. The Investigation found that Mr Stead had instructed a worker to stand on top of a skip to dispense flammable thinners onto burning waste to help it burn better. The thinners ignited, causing a fireball that blew the worker from the skip, who suffered serious  burns to his arms and legs.

The HSE found that Mr Stead:

  • Had not ensured that the burning of the waste was carried out in a safe or appropriate manner.
  • Had failed to administer any first aid and did not sent the worker to hospital, which the HSE deemed the most appropriate response given the severity of the injuries.

In addition, Mr Stead had failed to inform the HSE of the incident, and in so doing had not complied with the  legal requirement to do so, under Section 4(1) of The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (“RIDDOR”).

Following the investigation, Mr Stead pleaded guilty to breaching Section 37 of the Health and Safety at Work Act 1974 as well as pleading guilty to breaching section 4(1) of RIDDOR. He has been sentenced to 32 weeks’ imprisonment, half of which is on release under licence. He also received a director disqualification period of 7 years.

This is What The Health and Safety Executive said:

Adele Davies the HSE Inspector stated that:

“David Stead failed his employees. His actions could have resulted in the death of this worker. The young man suffered unnecessary life threatening injuries due to poor working standards.”

“We hope this sentence sends out a message that directors of businesses must take their health and safety responsibilities seriously.”

Our Comment on this Case

Had Mr Stead complied with his duties, under Section 37 and Section 4(1) respectively, he would have avoided the loss of his liberty and the reputational and financial damage caused by it. He would also have avoided the director disqualification penalty. The case is a reminder that compliance with Health and Safety legislation is a necessity for good working practice and that a failure to comply will result in severe action by the HSE, against the director personally.

We are well used to dealing with the tactics and strategy of defending such cases, to the best advantage of the Company and its directors.

If you have any questions regarding your duties as a company director under Health and Safety legislation, and the effect of non-compliance in any case, please contact us or call us today on 0121 200 7040 for a FREE, no obligation initial chat.