Director Disqualification for Deliberately Neglecting to Pay HMRC.
In a recent press release the Insolvency Service confirmed that a Mr Barry Cooperman of Altrincham has received a director disqualification period of 3 years and 6 months for failing to make sure that his company attended to its tax obligations to HMRC.
We see many cases of this type, and whilst non-payment to HMRC is viewed seriously, not all cases end up with a director disqualification undertaking. This article looks in some detail as to why Mr Cooperman was disqualified as a director of his company, Platinum Resources Limited trading as ‘La Rioja’, and how we, as director disqualification solicitors, might be able to help if you are facing similar allegations from the Insolvency Service.
What caused the Director Disqualification?
According to the press release, Mr Cooperman’s company was placed into Creditor’s Voluntary Liquidation on 19 July 2012. The amount owed to creditors was in excess of £178,000.00, with unpaid VAT and PAYE owing to HMRC totalling £90,000.00.
This led to an investigation by the Insolvency Service which found that Mr Cooperman had unfairly discriminated against HMRC by choosing to pay the Company’s trade creditors instead of the Company’s tax liabilities between March 2008 and April 2011.
Looking at the press release we suspect, from our experience, that it was most likely the lengthy (over 3 years) time period of non-payment of taxes to HMRC that was the determining factor for director disqualification proceedings being brought against Mr Cooperman. Otherwise, once again in our experience, the tax debt to HMRC compared to the money owed to trade creditors does not appear particularly remarkable.
Robert Clarke, Group Head of Insolvency Investigations North at the Insolvency Service is quoted as saying:
“Company directors have a duty to ensure businesses meet their legal obligations, including paying taxes. Deliberate neglect of tax affairs is not a victimless action as it deprives the taxpayer of the funds needed to operate public services and introduces unfair competition in the business market.
The Insolvency Service will investigate and disqualify directors who do not comply with their obligations and remove the protection of limited liability.”
What can be learned from this Director Disqualification Case?
This case shows that non-payment of HMRC debt – or trading to the detriment, as it is sometimes called – can be a ground for director disqualification proceedings to be brought.
If you are struggling to pay HMRC, the debt is accumulating and you are contacted by the Insolvency Service regarding the prospect of director disqualification, then the earlier that you get in touch with us the better. That is because it is more likely that we can help you, by perhaps being able to remove the threat of director disqualification or reduce the period of disqualification.
Click here for some case studies of our Director Disqualification work.
If you have received a letter from the Insolvency Service regarding the prospect of director disqualification, please call us today on 0121 200 7040 or contact us. Alternatively, why not email a copy of the letter that you may have received from the Insolvency Service to firstname.lastname@example.org for a no obligation / no pressure chat?