Press release

No work for boss of labour supply company as he is hit with 7-year ban

The director of a Kent-based company that provided sub-contracting services to the construction industry has been disqualified for 7 years.

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Amanpreet Danny Sahota of Dansah Ltd (“Dansah”) has been disqualified for 7 years for causing the company to submit false VAT returns to HM Revenue & Customs and trading Dansah to the detriment of HMRC, the majority creditor at the company’s liquidation.

Dansah commenced trading in April 2011 supplying labour via subcontractors to the construction industry.

Mr Sahota authorised VAT returns to be submitted to HMRC requesting refunds of VAT he claimed Dansah had paid to sub contractors.

The invoices he submitted to support these did not meet the standard required by HMRC with many being undated and not specifying what goods or services had purportedly been supplied. HMRC conducted an investigation into Dansah’s tax affairs and noted that the “suppliers” of the labour did not have the workforce to have conducted the work claimed by Mr Sahota.

These entities were ultimately compulsorily de-registered for VAT as ‘missing traders’ having never submitted any VAT returns themselves.

Other invoices submitted by Mr Sahota claiming refunds of VAT paid, were issued by another limited company of which Mr Sahota was the sole director. This company was never registered for VAT, Mr Sahota stated it was dormant and had never traded. Despite this Mr Sahota was content to present these to HMRC in an attempt to falsely reclaim VAT.

HMRC’s investigation determined that Dansah had used its own work force to fulfil its client’s requirements without verifying those labourers on the CIS system which gave rise to further tax. Mr Sahota did not appeal HMRCs findings.

Commenting on the disqualification, Andrew Stanley, Official Receiver Chatham at The Insolvency Service, said:

Mr Sahota deliberately misled HMRC in an attempt to avoid Dansah paying tax and attempted to reclaim tax that Dansah hadn’t paid. Mr Sahota has abused the tax regime; disqualifying him as a director upholds the integrity of the insolvency and taxation regimes and also acts as a deterrent to others from repeating such misconduct in the future.

Notes to editor

Mr Sahota’s date of birth is 27 April 1988 and he resides in Gravesend, Kent.

Dansah Ltd (CRO No. 07482260) was incorporated on 5 January 2011 and traded from Kent providing labour services.

Mr Sahota was a director from 5 January 2011 to liquidation. The Company was subject to a winding up order on 9 January 2015 on a petition presented by HM Revenue and Customs. At liquidation it had an estimated deficiency of £365,196.

On 4 May 2016, the Secretary of State accepted a Disqualification Undertaking from Mr Sahota, effective from 25 May 2016, for a period of 7 years. The matters of unfitness, which Mr Sahota did not dispute in the Disqualification Undertaking, were that:

Between 8 February 2012 and 21 May 2013 I caused Dansah Limited (“Dansah”) to submit false VAT returns to HM Revenue and Customs (“HMRC”). During this period and up to 9 February 2015, or its cessation of trade, I also caused Dansah to trade to the detriment of HMRC, the majority creditor at liquidation. As a result, at liquidation HMRC have issued a claim totalling £348,196, comprising VAT of £189,239, Corporation Tax (“CT”) of £56,000, Regulation 13 Determinations of £11,002 and penalties, surcharges and interest totalling £91,955.

VAT

  • Dansah submitted VAT returns for months ending December 2011 to December 2012, February and March 2013 claiming £15,865.33 was owed to HMRC; claiming a refund of £10,714.64.
  • In the absence of returns being submitted for the months ended January 2013 and April to September 2013, HMRC raised assessments.
  • As a result of an investigation conducted by HMRC they established that Dansah had under-declared the amount of VAT it owed and the central assessments raised by HMRC were also under estimated.
  • Consequently HMRC recalculated the VAT returns and central assessments, disallowing the claimed refunds and computed that the actual amount of VAT owed was £197,225.13 for the period from September 2011 to September 2013.
  • Total payments of £7,986.16 were received towards the VAT debt.

CT

  • In the absence of any CT returns being submitted, HMRC raised assessments for CT for the periods ending 31/03/12 and 31/03/13 totalling £56,000.

Regulation 13 Determinations

  • As a consequence of HMRC’s investigation they determined that Dansah supplied and paid its own self employed labourers without deducting CIS payments. Consequently HMRC raised Regulation 13 Determinations for the years ended 05/04/12 and 05/04/13 totalling £150,432. HMRC allocated £139,430 of CIS deductions made by Dansah’s clients to this debt resulting in a deficit of £11,002.

Comparative Treatment

  • At liquidation Dansah had liabilities totalling £365,196, these comprised of £348,196 claimed by HMRC and £17,000 claimed by me.
  • Dansah’s bank statements show that between 8 February 2012 and 9 February 2015, £922,846.51 was received and £927,314.72 was expended of which £9,086.16 was paid to HMRC.

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 28 July 2016