Directors of care recruitment company receive Director Disqualification bans for not paying over £33 million in tax. One director was banned for 14.5 years and the other for 11 years
There are many reasons for findings of Unfit Conduct that result in Director Disqualification. Right now, one of the most common and high profile is for fraudulent applications and/or subsequent misuse of Bounce Back Loans, or other Covid loans.
However, failing to pay tax owed by a company to HMRC is another one, and this case is an especially extreme example of the lengths some directors will go to in order to not pay the tax they owe. The outcome was that one of the directors was banned for 14.5 years (the maximum ban is for 15 years) and the other for 11 years, for under declaring the tax they owed to HMRC.
In this article, we look at the details of this case, and Neil Davies, our managing director and an expert in Director Disqualification law and practice, comments on the broad area of Director Disqualification for failing to pay tax.
The details of this Director Disqualification case.
- Raja Usman and his wife Khair Un Nisa were directors of Umbrella Care Ltd, a Derby-based company which provided NHS workers to the care sector.
- Investigations revealed the company under-declared more than £33 million in tax to HM Revenue and Customs between 2017 and 2020. The exact figures were: £12,031,159 in VAT and £21,596,982 in PAYE and NIC.
- It was found that the directors knowingly submitted inaccurate VAT, PAYE and NIC returns to HM Revenue and Customs (HMRC) on behalf of Umbrella Care between May 2017 and at least April 2020.
- Usman was banned as a company director for 14-and-a-half years in July 2024 and was also ordered to pay costs of £5,399.10. Nisa accepted an 11-year disqualification undertaking in 2023. The disqualifications prevent Usman and Nisa from being involved in the promotion, formation or management of a company, without the permission of the court, during the currency of the ban.
- Umbrella Care was wound-up in 2020, with liquidators having recovered c. £14 million in assets from the pair since then.
Lawrence Zussman, Deputy Head of Company Investigations at the Insolvency Service, said:
“Raja Usman and Khair Un Nisa deliberately under-declared the amount of tax Umbrella Care was expected to pay by tens of millions of pounds.
This was money that should have been used to provide vital public services and investment in areas such as schools, hospitals and roads.
The disqualifications ban Usman and Nisa from being company directors until 2034 and 2039 respectively and the liquidators continue to recover millions in pounds of assets worldwide.”
The Liquidation of Umbrella Care
Umbrella Care was wound-up in court in November 2020 following a provisional liquidation granted on petition from HMRC.
Insolvency practitioners from Azets, who were the previous provisional liquidators of Umbrella Care, were then appointed as liquidators on the same day. The company went into liquidation owing more than £35 million to HMRC.
As part of their responsibilities, Liquidators must report their findings to The Insolvency Service, who then decode what action to take, including the possibility of a Director Disqualification investigation.
In this case, the joint liquidators working with HMRC and their firm of solicitors conducted extensive investigations and litigation to recover wrongfully removed company funds and this has led to a considerable return to creditors, including:
- c.5.2 million from numerous bank accounts.
- 14 properties which have been recovered and sold for approximately £7.3 million.
Further property sales and investigations into funds transferred overseas and to third parties are expected to bring in an additional £1.5 million, bringing the estimated total recoveries to around £14 million.
Will this be the end of the story here, asks Neil Davies?
“It is conceivable, based on our experience, that a subsequent Criminal Law investigation may well follow.”
Contact us if threatened with Director Disqualification
As Director Disqualification solicitors, we regularly represent directors who are being investigated by the Insolvency Service for Director Disqualification and in respect of Criminal Law investigations by the Insolvency Service (IS); a Criminal Law investigation can and does often arise out of the same case. We have a strong track record in persuading the IS to drop their investigations, where there is enough evidence to support the Directors. In this case, on the facts of the IS’s report, such was the scale of the offence that disqualification was the most likely outcome.
In our experience, only the Director knows what truly went on in a liquidated company. The Insolvency Service (like the Liquidator) are strangers to such events. The Director must tell his/her story in the most compelling way.
Often, he/she will need expert advice from Solicitors experienced in Director Disqualification and insolvency work, as NDP is, to do that. Above all, we find it is important to remind the IS that companies can and do fail in the absence of delinquent behaviour, and it should not always be presumed that there has been unfit conduct by the Directors.
