Director Disqualification for False VAT Returns and Accounts
Director Disqualification Period of 11 years for Failure to Declare Duty, Filing False VAT Returns and False Accounts.
In this case study of a recent director disqualification, we look at a company director who received a severe disqualification period of 11 years for failure to declare duty, filing false VAT returns and false accounts. The full details are contained in The Insolvency Service’s press release regarding an investigation it carried out into the failure of Sertan Limited (‘the Company’) and the conduct of its sole director, Mr Hassan Serce (‘Mr Serce’).
Mr. Serce was punished severely but in our experience, when facing director disqualification, there are often options worth exploring which might result in a reduced period of disqualification or even the elimination of the prospect of disqualification.
Background to this Director Disqualification
The Company was a wholesaler of alcoholic and non-alcoholic drinks. It had commenced trading in July 2010 and was subsequently placed into liquidation in July 2013. The investigation by the Insolvency Service revealed that some months prior to liquidation, HMRC attended the Company’s premises to inspect the Company’s accounting records. HMRC found that the Company had sold more stock than it had purchased and that alcohol had been purchased without evidence that the applicable duty had been paid. As well as identifying undeclared sales, HMRC’s investigations also revealed that false accounting records had been filed at Companies House.
The Insolvency Service investigated matters further and established that Mr Serce had caused HMRC to lose c. £75,000 by failing to declare duty and filing false returns and accounts. In addition, Mr Serce’s conduct has also come under scrutiny for various payments out of the Company bank account to include cash withdrawals of £43,000 and payments totalling £60,000 to a former director. Mr Serce failed to produce documentary evidence explaining the various cash payments, or otherwise co-operate with the enquiries of the Liquidator or the Insolvency Service.
As a result Mr Serce was disqualified from acting as a director of any UK limited company for a period of 11 years. This was, therefore, a serious case of director misconduct resulting in a lengthy period of director disqualification.
What the Insolvency Service Said
Cheryl Lambert, Chief Investigator, at the Insolvency Service, stated that:
“Directors who submit false information to HMRC and fail to pay duty when due, can expect to be investigated by the Insolvency Service and enforcement action taken to be removed from the market place.
…Taking action against Mr Serce is a warning to directors of their duties to comply with their tax duties and obligations.”
There Might be the Prospect of More Legal Action Beyond the Director Disqualification
The conduct of Mr Serce certainly, on the face of it, warranted a director disqualification period in the upper range available to the Court, and it is now possible that Mr Serce may face the prospect of further claims by the Liquidator of the Company to recoup sums paid out of the Company bank account.
If you are facing the prospect of director disqualification proceedings or if you have a dispute with HMRC, as specialists in director disqualification it is our experience that there are always options to be explored which might remove the possibility of disqualification or reduce the length of the disqualification period. The earlier you get in touch with us the better.
Please contact us or call us today on 0121 200 7040 for a no obligation initial chat to explore your options.