Director banned for failing to keep good records

Who pays?
Why isn't this man made to pay the PAYE himself? Directors who completely ignore their statutory responsibilities shouldn't be able to hide behind the corporate structure

Tax evasion doesn't seem to matter these days

HMRC do have the power to claw back PAYE/NIC from directors. It sounds like he has evaded all sorts of taxes, and all he gets is a ban? There must be more to this than what is mentioned in the article.

The Taxman can afford wait. What about the creditors?

Those who are owed money in these cases can be driven to financial ruin, yet there is rarely any comment on here about how these people are compensated, if at all.

Vehicle recovery seems to be a popular 'vehicle' for such scams.  Another director of a Swindon-based vehicle recovery and repair garage in Swindon was disqualified last year from being a company director for six years for paying herself and a friend ahead of other creditors.  

I have a similar case, where the director and shareholder of a Bath-based company paid himself ahead of his co-shareholder, manipulated accounting records, then transferred the business to a new company (Unfair Prejudice) when his co-shareholder started asking questions.  The previous company stopped trading and was driven into a loss-making position, yet the director still paid himself more than the business had turned over, and shareholder assets disappeared.  He then made his wife director of both companies and became shadow director acting as the sole 'employee'.  She also formed a new company operating from the same registered address, but using her maiden name.  So, if she is banned as a director, she will still be operating as a director under a different name.  She has refused to provide the co-shareholder (now majority shareholder) with the full accounts for key years, and has now tried to have the old company struck off, and even refused to comply with a Companies House (Breaches Team) request for the full accounting records.  (I know she will read this post and claim she and her husband are being harassed and defamed ...except, she rarely uses her own name in correspondence, choosing to communicate through her husband, who will carry the can for the misfeasance!).

There seems to be no cost-effective formal route for such victims to obtain justice.

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@Louis your tale sounds painfully familiar.  There are lots of shysters about who play the system take all the money, pay no tax and seem to get away with it time and time again. They always claim to be the victim and anyone is to blame but themselves and no-one seems to lift a finger against them.  If you take them to court they have no assets, whilst driving away in huge cars and going back to large houses that don't somehow belong to them. 

They can and they have done!

“Without these it is impossible to verify what has happened to company funds, account for its assets or establish whether directors have acted properly.

Directors cannot hide behind accounting failures to cover up their actions and the Insolvency Service will take robust action against those who fail to maintain the standards required,” Clarke said."

So we can't prove that you committed tax fraud or money laundering because we are useless and it's not our job. So we will demand you don't have your name at companies house.

What sort of a punishment or deterrent do they think this is?

The answer is simple IF you are a criminal you can do what you like so long as you don't keep proper records.

Surely the directors wealth has therefore arisen from a criminal offence of not keeping accounting records can we quantify that well its more than £5k in paye.

HMR&C

They paid no PAYE between 2010 & 2012.

We were once late paying (due to my oversight - honest) and they visited our premises, bunged a constraining order (not sure of the technical term) on some of our property and took a cheque away with them.

I am not complaining at their treatment of us as we were overdue.  I am complaining at their apparent treatment of this and many other companies who get away without paying for so long.

I suspect that when they do eventually go bust the amount owed to creditors (including HMR&C) would much larger at the end of a three year period than at the start.

I am fed up with the number of business failures I see that have not paid HMR&C for so long.  I would like HMR&C to wear their steel-tipped boots as soon as a company defaults.  Yes, they can arrange payment plans if a company is struggling for cash and has the gumption to talk to them about it.  But by stopping a company from trading sooner rather than later the fall-out for themselves (and our services that taxation pays for) and the rest of the creditors will be reduced.

I know that any dodgy directors/shareholders will still just set up shop again under a different name but if they have to do that every six months rather than every four years word might get around a bit quicker.

The system is toothless, that's why so many don't bother with it, chances of getting caught are minimal.

Personal liability
IR can actually look to hold directors personally responsible for the NI element (not the tax) although it's not a power that they often use.

PAYING HMRC

I called HMRC to arrange a payment plan for my client. My client wants to pay the bill in three monthly payments starting March 2014 to May 2014.The tax was due end of February, 2014. HMRC did not want to hear this, instead they asked me to ask my client to sell off his assets or go to the bank to borrow money(at what charge from the bank?). I tried in vain to make sense with the HMRC official to no avail. At the end I stopped the conversation and advised my client to go ahead and make the three monthly payments.

The reason for the acse above is that I find it rediculous that people who offer to pay get harassed while others go forever with impunety. Unbelievable..

Wow

Not a bad punishment. I'm sure he can handle that.

Might go down that route myself if things get tough.

Credit control

Wouldn't want to be the credit control manager in the companies who are owed money here, £109k of debt for a company with a reported turnover of of approx £36,000 in at least 3 years?  Appreciate the majority of that may be HMRC but any supplier of goods or services with any material debtor probably needs to take a good look at their own practices.

Early warning system
Something like this would help, as opposed to MLR. Accountants are best judges of those unfit to run ltd companies and this should be highlighted before unfit directors leave many other businesses high and dry, and the public purse too. Granted many such directors/companies are not using an accountant, but surely there's a way of tackling this issue before insolvency hits?

Timothy and Jeanette Lynch

It is interesting to note that a Timothy and Jeanette Lynch were directors in two previously dissolved companies, Cross recovery services Ltd dissolved in 2008 and Lancashire vehicle storage Ltd in 2012. There was a share holder named Jeanette Lynch in T J Recovery Ltd although she was not named as a director. 

I have been a director in a number of companies over the years and have been on the receiving end of serial bustees. I have seen them set up many companies purely just to milk them. Even when one man was made personally bankrupt he carried on as a shadow director in several enterprises. 

Ltd liability is there to encourage directors to take risks, unfortunately it is sometimes abused. In a case such as the T J Recovery one where records have been blatantly ignored and where there may be a track record of similar goings on, then the receiver should have the power to go after the directors and share holders personally.