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Crown Debt allegations of unfit directorial conduct defeated

In this case, the debt owed to HMRC was £250,000, and the director had several other company failures already

Whilst much press coverage has been generated recently on the penalties that are now being given out for directors who fraudulently took out Bounce Back Loans, we continue to see an increase in Director Disqualifications for Trading to the Detriment of HMRC. In this testimonial, we report on how the NDP Team lead by Sukhbir Mall and Richard Shepherd has again successfully opposed another Director Disqualification Investigation (‘DDI’) in this area and saved the director from a 6-year disqualification. The allegations of Unfit Conduct against our Director client in this case related to a single matter of alleged Director misconduct, namely, ‘trading to the detriment of HM Revenue & Customs (‘HMRC’).’ The sum involved was £250,000.

Background to this Director Disqualification case

A common theme in the cases that we see across our desks is the allegation that the company at issue has failed to pay HMRC, or has traded to the detriment of HMRC, when it went into insolvent liquidation.

In this case, the company went into insolvent liquidation owing its sole creditor, HMRC (and ignoring the sums due to the Director) almost £250,000. The total deficiency to creditors in the liquidation was in excess of £320,000. With a number of other prior company failures under his belt, an investigation into this Director’s conduct by the Insolvency Service (‘IS’) was perhaps inevitable.

We were instructed after another form of Solicitors had made little progress

The Director had initially instructed another firm of Solicitors, but despite exchanging lengthy correspondence, no headway was made in persuading the IS to abandon the DDI. In fact, the IS issued a notice of intention to commence disqualification proceedings (the Section 16 Notice).

With his back against the wall and his current directorships in jeopardy, our client contacted NDP’s expert Solicitors in its Director Disqualification Team.

Our expert Solicitors’ investigation showed the problem was caused by another individual – a De Facto Director

Having investigated with the Director the background to the liquidation and taken detailed instructions, we were able to demonstrate that the company’s failure to settle the ongoing HMRC liability was a direct result of the conduct of another individual, who had acted as a De Facto Director of the company. A De Facto Director is a person who behaves as/holds him/herself out as a Director of a company, whilst not formally being registered at Companies House as a Director.

Despite the IS then changing tack and alleging that our client abrogated his duties (by not monitoring or controlling the conduct of the De Facto Director), we were able to unravel the IS’s case with a targeted and tenacious approach, which undermined the IS evidence, demonstrating that there was in fact no case to answer.

Having saved him from a 6-year disqualification, our Director client was mightily relieved

Our continued success demonstrates that the right written representations made to the IS can result in the abandonment of a DDI, even in the most difficult of cases. Click here to see some more director disqualification testimonials.

Talk to us if you, or a client, are facing a Director Disqualification Investigation

If you are facing the prospect of Director Disqualification, please contact us or call on 0121 200 7040 for a FREE initial chat. Ask for: