Directorship bans for bosses who breached their duties and withdrew company funds for themselves
Jason MacDonald and Scott Darren McDonnell have each been disqualified from acting as directors for 5 years from 18 August for withdrawing funds from Longbridge PWM Limited to pay themselves and their personal tax liabilities, whilst the company owed HMRC more than £200,000.
The company offered recruitment services in the finance industry and traded profitably up until late 2012 / early 2013 when it began to experience financial difficulty.
An investigation by the Insolvency Service, which led to the bans, found:
- that prior to 1 January 2013 Mr MacDonald and his fellow director received a total of £173,000 remuneration as dividends in the year to 31 March 2011 and £311,000 in 2012.
- in December 2012, the directors amended their remuneration to a salary, subject to PAYE/NIC. Longbridge filed a Corporation Tax return for the year ending 31 March 2012, due for payment on 1 January 2013, showing £98,749 owed.
- between January 2013 and June 2013 Longbridge made payments to Mr MacDonald and Mr McDonnell from the Company’s bank account totalling £212,815, including using £40,352 to HMRC to pay personal tax liabilities.
As a consequence of the directors amending their remuneration, PAYE/NIC became due on the money they took from the company, resulting in HMRC raising a claim for £160,632.
Longbridge did not make any payments in relation to PAYE/NIC. Payments totalling £13,000 were made towards Corporation Tax.
At liquidation, the company owed HMRC at least £249,382, with no payments being made in relation towards PAYE debts.
The company began trading in 2009, with Mr MacDonald and Mr McDonnell as the only directors.
Commenting on the disqualification, Cheryl Lambert, Chief Investigator at the Insolvency Service, said:
Directors who use company funds for their personal expenses whilst not paying HMRC, can expect to be investigated by the Insolvency Service and enforcement action taken to remove them from the market place.
Mr MacDonald & Mr McDonnell breached their duties as directors and caused HMRC to lose nearly £250,000 whilst they took over £200,000 from the company. Taking action against Mr MacDonald & Mr McDonnell is a warning to directors that their duties include considering the company’s tax liabilities before paying themselves.
Notes to editors
Longbridge PWM Limited (CRO 07140987) was incorporated on 29 January 2010. Its registered office was 4th Floor, 100 New Bond Street, London, W1S 1SP. It traded from the same address. Jason MacDonald and Scott Darren McDonnell were the only directors at the time of Liquidation.
Longbridge PWM Limited was placed into Liquidation on 6 August 2013.
Jason MacDonald is of Hertfordshire. His date of birth is 31 May 1971.
Scott Darren McDonnell is of Norwich. His date of birth is 11 March 1968.
The Secretary of State accepted undertakings from Jason MacDonald and Scott Darren McDonnell on 28 July 2015. The disqualifications commenced on 18 August 2015.
A disqualification order or undertaking 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.
All public enquiries concerning the affairs of the company should be made to: Cheryl Lambert, Head of Outsourced Investigations, Investigations and Enforcement Services, The Insolvency Service, 3rd Floor, Abbey Orchard Street, London SW1P 2HT. Tel: 0207 596 6117. Email: Cheryl.Lambert@insolvency.gsi.gov.uk.
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Published: 8 September 2015
From: The Insolvency Service