Press release

Directors fail to practice what they teach

Two directors of a company that provided management accounting services to schools have ben disqualified for neglecting the company’s tax affairs.

Barry McColgan and Elena McColgan, who both acted as directors of Financial Management For Schools Limited (Financial), have been disqualified for 8 years and 3 years 6 months respectively, for failing to ensure the company registered with Her Majesty’s Revenue & Customs (HMRC) for VAT and PAYE/NIC as required despite charging VAT. They also caused the company to trade to the detriment of HMRC from 1 July 2005 until November 2014 in respect of VAT and from 22 May 2009 at the latest to November 2014 in respect of PAYE/NIC.

At the date of Liquidation HMRC were owed an estimated £134,438 in respect of VAT and £35,369 in respect of PAYE/NIC.

The disqualifications, from 18 July 2016, prevent Mr and Mrs McColgan from directly or indirectly becoming involved in the promotion, formation or management of a company for the duration of the term.

Commenting on the disqualification, Robert Clarke, Head of Company Investigations at The Insolvency Service, said:

Company directors have a duty to ensure businesses meet their legal obligations, including registering for and paying taxes. Deliberate neglect of tax affairs is not a victimless action as it deprives the taxpayer of the funds needed to operate public services.

The Insolvency Service will take action against directors who do not take their obligations seriously and abuse their position of trust

Notes to creditors

Mr McColgan’s date of birth is 26 August 1946 and he resides in Surrey.

Mr McColgan was a director from 18 January 1999 to 5 March 2015, the date of liquidation. The Company went into liquidation on 5 March 2015 with an estimated deficiency of £214,407.

Mrs McColgan’s date of birth is 16 December 1966 and she resides in Surrey.

Mrs McColgan was a director from 28 May 2004 to 5 March 2015.

Financial Management for Schools Limited (CRO No. 03696960) was incorporated on 18 January 1999 and commenced trading in June 2005. Financial latterly traded from Purley in Surrey and provided management accounting services to schools.

On 27 June 2016, the Secretary of State accepted a Disqualification Undertaking from Mr McColgan, effective from 18 July 2016, for a period of 8 years. The matters of unfitness, which Mr McColgan did not dispute in the Disqualification Undertaking, were that while a director of Financial Management For Schools Limited, I failed to ensure that Financial Management for Schools Limited registered with HMRC in respect of VAT and PAYE/NIC as required despite charging VAT and caused Financial to trade to the detriment of HMRC from 1 July 2005 until November 2014 in respect of VAT and from 22 May 2009 at the latest to November 2014 in respect of PAYE/NIC. As a result at the date of Liquidation HMRC were owed an estimated £134,438 in respect of VAT and £35,369 in respect of PAYE/NIC.

On 27 June 2016, the Secretary of State accepted a Disqualification Undertaking from Mrs McColgan, effective from 18 July 2016, for a period of 3 years 6 months. The matters of unfitness, which Mrs McColgan did not dispute in the Disqualification Undertaking, were that while a director of Financial Management For Schools Limited, I abrogated my duties as a director of Financial Management for Schools Limited between July 2005 and November 2014 by failing to involve myself in the running of the company and thereby failed to ensure that the company registered with HMRC in respect of VAT and PAYE/NIC with the result that at the date of Liquidation HMRC were owed an estimated £134,438 in respect of VAT and £35,369 in respect of PAYE/NIC.

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 administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, 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, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice.

Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available.

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