Director banned over poor accounting records

A Glasgow business owner was disqualified as a director for seven years for his failure to keep adequate accounting records.

Alan Coffey, former director of Datadesk Computer Services, received the ban at Airdrie Sheriff Court in Scotland after the Insolvency Service (IS) investigated his company.

His failure to keep proper accounting records meant the IS couldn’t verify if £312,266 paid out of his bank account was for the company’s benefit.

The figure included £123,000 paid to...

Continued...

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Comments

For once hooray!    2 thanks

David Gordon FCCA | | Permalink

 

Not many things would improve the reputation of and the running of small companies, than this practice to become a regular well advertised practice.

 It is too easy to obtain the advantages of limited liability without also taking on the attached responsibility.

 Sadly too many small enterprises fail not because of lack of customers, but because of this particular problem.

 I have just suffered one more example. Despite my chasing (Shouting, begging, pleading!!) him on almost a weekly basis, the guy was "Too busy working" to issue sales invoices!! or deal with VAT matters (or pay to have the book-keeping done)

 Now the company has shut, he delivered all the paperwork. His small company was probably earning him well into five figures.

 He was not the first, and will not be the last.

 

 

More like this please    2 thanks

the_Poacher | | Permalink

There needs to be many more disqualifications of people who who abuse the privilege of limited liability.

Kill UK PLC

LittleWhiteBull | | Permalink

the_Poacher wrote:
There needs to be many more disqualifications of people who who abuse the privilege of limited liability.
Great! Destroy all UK's small businesses and lose our clients and put all us accountants on Jobseekers Seekers Allowance, with very little alternative work for us to do. We may as well all take up Russian roulette.

All small businesses    2 thanks

the_Poacher | | Permalink

Interesting, you think all small businesses fail to maintain records and abuse the privilege of limited liability status. No wonder HMRC are struggling

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the_Poacher | | Permalink

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good accountants should never be out of work!    1 thanks

dmmarler | | Permalink

No small business should be allowed to start operating without some qualified accountancy oversight!  There will always be someone with an entrepreneurial spirit and will need our services, never fear. 

Outrageous

The Black Knight | | Permalink

LittleWhiteBull wrote:

the_Poacher wrote:
There needs to be many more disqualifications of people who who abuse the privilege of limited liability.
Great! Destroy all UK's small businesses and lose our clients and put all us accountants on Jobseekers Seekers Allowance, with very little alternative work for us to do. We may as well all take up Russian roulette.

It is they that are killing UK plc.

You don't need a competent accountant to commit fraud or not keep any records do you.

Are you supporting this type of behaviour? Or are you just a specialist at this sort of advice?

AGREE

LittleWhiteBull | | Permalink

dmmarler wrote:

No small business should be allowed to start operating without some qualified accountancy oversight!  There will always be someone with an entrepreneurial spirit and will need our services, never fear. 

Wholeheartedly agree with 'dmmarier'. We are good at our jobs, spent years qualifying and we enjoy helping businesses. Bring the work on, we love working hard.

reply to The Black Knight

LittleWhiteBull | | Permalink

The Black Knight wrote:

LittleWhiteBull wrote:

the_Poacher wrote:
There needs to be many more disqualifications of people who who abuse the privilege of limited liability.
Great! Destroy all UK's small businesses and lose our clients and put all us accountants on Jobseekers Seekers Allowance, with very little alternative work for us to do. We may as well all take up Russian roulette.

It is they that are killing UK plc.

You don't need a competent accountant to commit fraud or not keep any records do you.

Are you supporting this type of behaviour? Or are you just a specialist at this sort of advice?

No I am suggesting thar more businesses should use qualified accountants to keep them straight. We enjoy working hard, at least I do and I am now 61.

apologies then

The Black Knight | | Permalink

Apologies then.

It is much easier surely to say look what happens if you flout the rules, that is why you need my knowledge and experience.

I don't think this case went far enough! s.389 CA 2006 carries a fine and a prison sentence.

The insolvency service clearly suspected fraud, felt they could not prove it so dropped the case.

Equally there was insufficient records to establish the directors overdrawn loan account, where was HMRC's determination based on a reasonable assumption to collect the determination of corporation tax which would then have been recoverable from the directors personally.

Instead we have a disqualification as if that means something. You just know that Mum, the wife or next doors cat is going to appear as a director on the next company until the disqualification period ends.

Yes they will still be directors and or shadow directors but the policemen are untrained in the law.

So the action is completely ineffectual as usual. Really is pathetic and an insult to the hardworking and honest of this once great nation.

Further more

The Black Knight | | Permalink

The message is if you are going to commit company Fraud, do not keep any records and you will get away with a slap on the wrists.

silicondale's picture

Missed the point

silicondale | | Permalink

LittleWhiteBull wrote:

dmmarler wrote:

No small business should be allowed to start operating without some qualified accountancy oversight!  There will always be someone with an entrepreneurial spirit and will need our services, never fear. 

Wholeheartedly agree with 'dmmarier'. We are good at our jobs, spent years qualifying and we enjoy helping businesses. Bring the work on, we love working hard.

This issue has nothing to do with whether or not  a small business operates with or without a qualified accountant. Do you mean there is no such thing as a crooked accountant? There are at least as many of them as crooked directors, or crooked lawyers for that matter.

Also, of course, the accountant is unlikely to be maintaining the company's paperwork on a day-to-day basis, unless it's a fairly large business that needs and can afford that sort of support. There are many small companies and micro-companies whose businesses are simple enough that they really don't need to use the services of a qualified accountant at all, and indeed where incurring the associated costs could be seen as against the company's interests, and therefore a breach of the director's fiduciary duty towards his/her company.

I have been operating my own company for 20 years, the last 19 without using any accountancy services. It isn't rocket science to do one's own VAT, PAYE, and corporation tax returns, and has actually become easier with the introduction of HMRC's online systems. I keep all sales and purchase records in a file and it takes no more than an hour or two each quarter to do the VAT computations. I've saved several thousand pounds over the life of the company through doing these things myself. I don't spend company money on wholesale coffee transactions or investment in offshore oil and gas businesses - and of course if I were to do that I would indeed need the services of a "creative accountant". I realise that many on this particular website will disagree, but just running an ordinary small business it really isn't necessary for every company to use qualified accountancy services. 

I love working hard too. My VAT calculations have to wait for a quiet Sunday afternoon.

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The Black Knight | | Permalink

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Yeah right!

The Black Knight | | Permalink

[/quote]

 There are many small companies and micro-companies whose businesses are simple enough that they really don't need to use the services of a qualified accountant at all, and indeed where incurring the associated costs could be seen as against the company's interests, and therefore a breach of the director's fiduciary duty towards his/her company.

I have been operating my own company for 20 years, the last 19 without using any accountancy services. It isn't rocket science to do one's own VAT, PAYE, and corporation tax returns, and has actually become easier with the introduction of HMRC's online systems. I keep all sales and purchase records in a file and it takes no more than an hour or two each quarter to do the VAT computations. I've saved several thousand pounds over the life of the company through doing these things myself. I don't spend company money on wholesale coffee transactions or investment in offshore oil and gas businesses - and of course if I were to do that I would indeed need the services of a "creative accountant". I realise that many on this particular website will disagree, but just running an ordinary small business it really isn't necessary for every company to use qualified accountancy services. 

I love working hard too. My VAT calculations have to wait for a quiet Sunday afternoon.

[/quote]

Nope but you will find the doors left wide open from what you don't know and we/I usually save about 6 times the fee anyway!

Just done a tax return that the client could have done himself, savings from the advice that followed £26K !

 

silicondale's picture

Yeah right - as I said, creative accountants

silicondale | | Permalink

The Black Knight wrote:

Nope but you will find the doors left wide open from what you don't know and we/I usually save about 6 times the fee anyway!

Just done a tax return that the client could have done himself, savings from the advice that followed £26K !

 

Not much scope for legitimate tax savings if all you have is simple purchases and simple sales, and you've already done what you're allowed with salaries and dividends. In a previous company that I ran, the accountant's advice on tax saving was to put company cash into shipping containers and private jets. As if we didn't have better uses for the money! It could possibly have saved the company thousands in tax - but the cost would have been distorting our business by taking our eye off the ball. Just like offshore oil and wholesale coffee, come to think of it.  

Qualified accountant

dmmarler | | Permalink

I did say a qualified accountant .. someone who should give professional and ethical advice, not just a mountain of tax avoidance schemes which will cost an arm and a leg in consultancy fees and not help the business!  A qualified accountant will help the company set up a good and appropriate accounting system, with basic management controls and demonstrate what management information will help the proprietor manage the new business.  A qualified accountant will assist the owner and the bookkeeper as appropriate with any queries during the year (saves hours of unscrambling it all later) and at the year end prepare the statutory accounts and discuss with the owner how objectives have been met and what could be improved the following year.  It is not rocket science to accountants, but so many new entrepreneurs do not seem to have a grasp of any aspect of numbers, economics, contract law or record keeping, yet alone the basics of tax.

We could require that all new enterprises register with their local chamber of commerce and HMRC, have a qualified accountant (if not chosen, selected) before they commence trading, and perhaps some training ...  It could help UK plc. 

For clarification

The Black Knight | | Permalink

for clarification:

No creative accounting, No dodgy tax scheme. Just the basics often missed.

Would have a bet your low salary and high dividends don't work. Not seen one done right yet.

Seen the penalties though!

silicondale's picture

Training yes, the rest, NO!

silicondale | | Permalink

dmmarler wrote:

I did say a qualified accountant .. someone who should give professional and ethical advice, not just a mountain of tax avoidance schemes which will cost an arm and a leg in consultancy fees and not help the business!  A qualified accountant will help the company set up a good and appropriate accounting system, with basic management controls and demonstrate what management information will help the proprietor manage the new business.  A qualified accountant will assist the owner and the bookkeeper as appropriate with any queries during the year (saves hours of unscrambling it all later) and at the year end prepare the statutory accounts and discuss with the owner how objectives have been met and what could be improved the following year.  It is not rocket science to accountants, but so many new entrepreneurs do not seem to have a grasp of any aspect of numbers, economics, contract law or record keeping, yet alone the basics of tax.

We could require that all new enterprises register with their local chamber of commerce and HMRC, have a qualified accountant (if not chosen, selected) before they commence trading, and perhaps some training ...  It could help UK plc. 

Indeed not rocket science. Keep the papers in order and you and you can do all the routine stuff yourself. I agree absolutely that the "perhaps some training" should be required for all company directors. We were very fortunate that for the first year of our company's operation we had an excellent accountant who not only set up our systems but also taught us how to operate them. He was also ethical enough to realise that we didn't actually need his services as long as our requirements remained very simple, but he was available at the end of a phone line if needed for advice on anything unexpected. So far we haven't had to call, and I think he retired a few years ago. 

Not at all sure I agree with your other idea. Registration with HMRC is required anyway but all the rest is red tape and unnecessary expense. I have joined the FSB because I see it as offering valuable services. For a micro-company, the additional cost of joining a chamber of commerce may be a little too much - and the idea of making it mandatory is quite wrong.

 

registration for new businesses

dmmarler | | Permalink

In the UK a new business can start and it should register with HMRC as you suggest.  Unfortunately many do not - hence my suggestion for some sort of compulsory registration which has to appear on all paperwork so the outside world knows whether an organisation is legitimate before trading.  Companies already have to display their registration details, so that is a done deal and HMRC can track them down.  It is the unincorporated businesses which need some very light touch regulation in this regard.  (The FSB is an excellent organisation - I am a member too.)