The convictions follow an initial investigation by the Insolvency Service and a full criminal investigation and Prosecution by the Department for Business, Innovation and Skills (BIS).
Mr Arfan Ali Khan, aged 34, has been sentenced to 16 months’ imprisonment and disqualified from being a company director for a period of 10 years after pleading guilty to a number of offences.
The offences for which Mr Khan was sentenced at Newcastle-upon-Tyne Crown Court on Monday 20 July 2015, were:
- one of fraudulent removal of £150,000.00 worth of company property in anticipation of the winding up of the company
- failing to keep adequate accounting records
- re-using a prohibited company name
Mr Gerard Burns, aged 69 has been sentenced to 10 months’ imprisonment (to be suspended for 2 years) and disqualified from acting as a company director for a period of 5 years.
The offences for which Mr Burns was sentenced at Newcastle-upon-Tyne Crown Court on Monday 20 July 2015 were:
- one of fraudulent removal of £150,000.00 worth of company property in anticipation of winding up of the company
- failing to keep adequate accounting records
The investigation found both Mr Khan and Mr Burns unlawfully transferred £150,000.00 from Thornaby Cars Limited trading as Royal Cars before it was wound up to another company which they controlled when they knew that such an amount was owed to HMRC for unpaid VAT. In doing so, they prevented HMRC from being paid the debt that it was owed.
Both Mr Khan and Mr Burns failed to keep adequate accounting records to show the financial position of Thornaby Cars Limited.
Mr Khan further continued to use the business name Royal Cars previously used by Thornaby Cars, when its use had been prohibited for a period of 5 years from 28 July 2010.
In addition to these actions, confiscation proceedings are ongoing.
Deputy Chief Investigative Officer, Mr Simon Button from the Department for Business, Innovation and Skills said:
The Insolvency Service and The Department for Business, Innovation and Skills will take firm action when we find that Company Directors have abused the trust that the public expect from them when they hold such a responsible position.
Both Mr Khan and Mr Burns were clearly aware that the money belonged to the company and its creditors, and was not theirs to do with as they wished.
Notes to editors
Thornaby Cars Limited, trading as Royalty Cars (Company Number 05213839), was incorporated on 24 August 2004. The company was wound-up on 28 July 2010 following a petition by HMRC.
Mr Arfan Ali Khan is of Middlesbrough and his date of birth is 16 January 1981.
Mr Gerard Burns is of Middlesbrough and his date of birth is 20 September 1946.
BIS’ mission is to build a dynamic and competitive UK economy, in particular by creating the conditions for business success and promoting an open global economy. The Criminal Investigations and Prosecutions team contributes to this aim by taking action to deter fraud and to regulate the market. They investigate and prosecute a range of offences, primarily relating to personal or company insolvencies. Further information about the work of the Criminal Investigations and Prosecutions team 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.
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.
Media enquiries for this press release – 020 7596 6187
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