Husband and wife banned for £1 million under-declaration to HMRC
Two directors of a newsagents have been disqualified for a combined 13 years for submitting false information to tax authorities.
Mohammed Arshid (61) and Maqsoodan Arshid (57) of Broughty Ferry, Dundee, have given undertakings to the Secretary of State for Business Innovation and Skills, that they won’t act as directors of a company for a period of 11 years and 2 years respectively, from 4 May 2016.
An investigation by the Insolvency Service found Mohammed Arshid had breached his fiduciary duty as a director by submitting false information to HM Revenue & Customs (HMRC) resulting in lost revenue on PAYE Tax, NIC, VAT and Corporation Tax totalling £1,020,423. His wife, Maqsoodan Arshid, was disqualified for abrogating her duties as a director which allowed Mohammed Arshid the freedom to commit the offence, which they both personally benefitted from.
Mohammed and Maqsoodan Arshid were both directors of Nethergate Newsagents Limited which was placed into compulsory liquidation on 17 July 2014, on the petition of HMRC with debts of £1,044,973.
The liquidation of Nethergate Newsagents took place after HMRC conducted a 5 year investigation during which established that Mohammed Arshid caused the company to under-declare and conceal liabilities:
for 17 years, between tax years 1996/1997 and 2012/2013, he concealed liabilities owed to HMRC for PAYE Tax and NIC through submitting false P35 End of Year Returns resulting in lost revenue, inclusive of penalty charges, in the sum of £525,454.
for a period of 64 VAT quarters between February 1997 and November 2102, he concealed liabilities owed to HMRC for VAT through concealing sales resulting in lost revenue, including penalty charges, in the sum of £170,182
over three consecutive financial years between 30 November 2005 and 30 November 2007 he submitted incorrect company tax returns and in the following 6 years to 30 November 2013, he understated the company’s sales resulting in lost revenue, including penalty charges, in the sum of £221,282
by their own admission, the cash misappropriations, from the company allowed Mohammed and Maqsoodan Arshid and their family members to achieve personal gain including home improvements, private education and topping-up of employee wages
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.
These bans 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
Nethergate Newsagents Limited (CRO No.SC169726) went into compulsory liquidation on 17 July 2014 with a deficiency to creditors of £1,280,249 which subsequently decreased to £1,044,793. The company operated in “other retail” from premises at 96 Nethergate, Dundee, DD1 4ER.
Mohammed and Maqsoodan Arshid’s respective dates of birth are 4 March 1956 and 8 February 1959.
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.
Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings. Further information on director disqualifications and restrictions can be found here.
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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Published: 27 July 2016
From: The Insolvency Service