A Cautionary Lesson – Director Disqualification

HMRC are once again at the centre of disciplinary action taken against Directors of failed companies. 

In one of our more recent cases, The Insolvency Service has secured undertakings under the Company Directors Disqualification Act against two directors for a failure to deal with a variety of VAT and PAYE issues.

The Insolvency Service has focused on the Directors responsibility to ensure the company complied with statutory obligations to file VAT and PAYE returns and make payments when due.  In this particular case, the figures were perhaps at the lower end of the spectrum that we encounter with total Crown debts of £44,000 making up 68% of the total creditors.  The non-compliance dates back around 3 years before liquidation.

There are a couple of things worth noting in this case -firstly, the swift action taken by the Insolvency Service.  The liquidation commenced in September 2017 and the disqualification proceedings concluded in July 2018.  Secondly, the period of disqualification was agreed at 3 years and 6 months per Director, which is a tad higher than in similar past cases.

As you may have seen from our other posts, there is a concerted effort underway by HMRC to police the behaviour of Directors of SME’s and tackle non-compliance.  This latest example is something you may wish to use in your discussions with clients who may have a lax approach to tax compliance and encourage those who need it to bring both returns and payments up to date!