Payroll directors banned after £1.4m tax failings

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Two accountants have been disqualified as directors after owing HMRC over £1.4m in taxes.

Cardiff-based accountants Kenneth Munn and Richard Rees were struck off as of 28 July, with Munn unable to act as a director for seven years. Rees received four years.

The disqualifications came into effect on the 19 July, and the secretary of state for Business Energy and Industrial Strategy accepted the disqualifications on 28 July.

Munn and Rees acted as directors for four payroll companies: Dormco SCP Ltd, S C Personnel Ltd, Cotsen Accountants Ltd, and Cathedral Road Management Ltd.

After the company Dormco fell into liquidation in August 2013, the Insolvency Service launched an investigation which unearthed myriad tax failings Munn and Rees committed during the period they controlled the companies.  

Both Munn and Rees were found responsible for failing to pay PAYE and national insurance contributions for all four companies. The directors’ failure to pay PAYE and NIC amounted to £1,242,616.

The investigation also surfaced Munn’s failings to file a corporation tax return. The insolvency investigation found Munn knew that through doing this the company paid £168,520 less tax than the amount due.

So when the companies did collapse into liquidation, the directors had tried to escape £1,450,995 in tax owed to HMRC.

In a press release, Sue MacLeod, the chief investigator at the Insolvency Service, scolded Munn and Rees’ actions explaining that the pair not only took an unfair advantage over competitors but also “seriously” short changed the public purse.

She added: “If you run a business in a way that is unfairly detrimental to any of its creditors, including by failing to correctly pay tax, the Insolvency Service will seek to remove you from the business environment.” 

About Richard Hattersley

Richard is AccountingWEB's practice correspondent. If you have any comments or suggestions for us get in touch.

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By ShayaG
16th Oct 2017 18:49

It does seem to me that disqualification from acting as a director is a woefully inadequate deterrent.

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17th Oct 2017 09:38

is that the only outcome?

And they presumably pocketed some large salaries in the mean time....

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17th Oct 2017 12:05

I'm struggling to see why this didn't have criminal sanctions. I've seen people jailed for similar actions.

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