Director banned for £5m VAT failings as company piled up £43m debts
David Charles Allen (62) of Dubai, United Arab Emirates, has given an undertaking not to act as a director of a company for a period of 11 years from 5 June 2015 after an Insolvency Service investigation found he breached his position of trust by knowingly instructing the submission of a VAT return which was under-declared by £5millon.
Mr Allen was the sole director of Work Legal-E Limited, which went into Creditors Voluntary Liquidation on 26 July 2013 with debts of over £43m owing to HMRC. His undertaking, to the Secretary of State for Business Innovation and Skills, means that he may not be a director of a company or be involved in the management of a company in any way for the duration of his disqualification. The investigation found that:
- on 2 June 2011 the company accountant notified the company and Mr Allen that the VAT liability for 4th quarter of 2011, covering the period February 2011 to 30 April 2011 was £8,417,468
- On 08 June 2011 the company submitted an online VAT Return for quarter 04/11 disclosing a liability of £3,417,648. On the same day the company settled the declared liability
- Between 13 June 2011 and 19 August 2011 Mr Allen received 3 payments from the company totalling £1,650,000 for which there is no contractual evidence to support his entitlement to the payments made
During a meeting with HMRC on 10 and 11 April 2013 Mr Allen advised he had opted to under-declare the liability as he considered the company was “tight on money”.
A review of the company’s bank statements disclosed the company had sufficient funds to meet payment of the true liability owed for quarter 04/11 in the sum of £8,417,648, between 09 June 2011 and 11 October 2011 and sporadically during October and November 2011.
Commenting on the disqualifications, Robert Clarke, Group Leader - Insolvent Investigations North, said:
Directors who put their own personal financial interests above those of customers and creditors damage confidence in doing business and are corrosive to the health of the local economy.
This ban should serve as a warning to other directors tempted to help themselves first; you have a duty to your creditors and if you neglect this duty you could be investigated by the Insolvency Service and removed from the business environment.
Notes to editors
Work Legal-E Limited (CRO No.07084154) went into creditors’ voluntary liquidation on 26 July 2013 with a deficiency to creditors of £26,339,000, which subsequently increased to £43,365,750. The company operated in “other business support service” as a payroll service provider from premises at 101 George Street, Edinburgh, EH2 3ES.
David Charles Allen’s date of birth is 18 May 1953.
A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:
- act as a director of a company
- take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
- be a receiver of a company’s property
In addition that person cannot act as an insolvency practitioner and there are many other restrictions are placed on disqualified directors by other regulations.
Further information on director disqualifications and restrictions is available.
The Insolvency Service (in Scotland) deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees and advises ministers and other government departments on insolvency law and practice.
It may also use powers under the Companies Act to conduct confidential fact-finding investigations into the activities of live limited companies.
Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available.
Published: 2 July 2015
From: The Insolvency Service