Tag Archives: The Insolvency Service

Oxford Mobile Phone Dealer Handed 12 Year Disqualification

A director of an Oxford wholesale mobile phone company has been banned from running a business for his part in a VAT fraud scheme

Parliament Street

Parliament Street

William Robert Howard (45) director of the now liquidated Expeditors Limited has entered into an undertaking that prevents him from acting as a director for 12 years.

The mobile phone business was incorporated in 2004 and a petition was made to wind up Expeditors Limited in June 2017 by HM Revenue & Customs regarding an unpaid VAT bill of £22,545.40.

The Insolvency Service then conducted an investigation, which focused on the mobile phone company’s participation in a form of VAT fraud known as Missing Trader Intra Community fraud (MTIC).

Commonly known as ‘carousel’ fraud, MITC fraud sees large consignments of high-value electrical or small items invoiced rapidly and repeatedly around trading chains. On paper the goods look like they are being moved repeatedly from customer to customer but the goods are only moved as they enter or exit the UK.

In the case of Expeditors Limited, William Howard used the scheme to offset VAT and reclaim close to £350,000 in its 2005 to 2006 VAT return.

Examples of MITC conducted by William Howard were indicated by the rapid succession of same-day trades within the UK but goods weren’t delivered and remained on a shared freight forwarder, there were common uses of the same offshore bank, as well as payments being arranged with third parties who were neither suppliers nor customers.

Additionally, all the traders banked with the First Curacao International Bank which was shut down by the Netherlands Antilles authorities in September 2006 in order to prevent money laundering.

William Howard’s disqualification started on 5 February 2018 and means that he cannot promote, manage, or be a director of a limited company until 2030.

Anthony Hannon, Official Receiver in the Public Interest Unit of the Insolvency Service, said:

This type of VAT fraud is very serious and a high priority for HMRC and the Insolvency Service.

MTIC fraud has caused loss to the public purse and has cost the tax payer substantial sums in fraudulent VAT claims. The Insolvency Service is committed to making directors accountable for their actions.

Bankruptcy Restriction For Man Who Gambled Money Borrowed From Family

Leicester based Shared Dayaram Patel has been handed an 11 year bankruptcy restriction from for making false representations to obtain loan funds of £390,000

Parliament Street

Parliament Street

This follows an investigation by the Insolvency Service, which found representations were made to family and friends to get money, which was used for online spread betting and to fund his lifestyle.

Mr Patel entered into a 11 year bankruptcy restrictions’ undertaking on 18 December 2017, by the restrictions set out in insolvency law that a bankrupt is subject to until they are discharged from bankruptcy (normally 12 months) until 2028.

Between 2013 and 2017, Mr Patel made false representations to family and friends to obtain loan funds of £390,000, saying that the funds were to be used as a venture investment. He used £238,451 of these funds to finance online spread betting, with the majority of the remaining funds being used to fund Mr Patel’s lifestyle. Mr Patel’s actions directly resulted in him becoming insolvent with total liabilities of £403,753.

Mr Patel was declared bankrupt on 26 July 2017 with a deficiency of £386,238. Mr Patel was interviewed at the Official Receiver’s office at which time he stated that around December 2012 he began online spread betting and initially used his savings to fund this. However once his money ran out he obtained funds from family and friends and used the money he received to continue gambling.

The loans were covered by formal agreements which stated that Mr Patel would hold the investment funds for the duration of 12 months during which time the investor would not be able to withdraw the capital invested.

Mr Patel advised family and friends that the funds were to be used as a venture investment but he was in fact using the funds to finance his online spread betting and, from June 2015 onwards, to fund his living expenses with a very small amount being used to repay a couple of the lenders.

In January 2017 when all the money had been exhausted he ceased gambling and sought advice regarding his financial situation following which in July 2017 he made his own application for bankruptcy.

Commenting on the bankruptcy restriction, Gerard O’Hare, an Official Receiver at the Insolvency Service said:

Where a bankrupt has taken undue risks with creditors’ money, he should not expect to do so without repercussions, particularly when others suffer financial loss as a result.

A bankruptcy restriction in these circumstances will serve to provide creditors with a degree of protection, and it will also act as a deterrent to the bankrupt not to act in a similar manner in the future.

Director Disqualified For Selling Company Assets For Own Benefit

Gilmour James McFarlane, director of Garden Haulage Limited, has been disqualified from acting as a director of a limited company for 7 years

Parliament Street

Parliament Street

The disqualification order was granted at Perth Sheriff Court following an investigation by the Insolvency Service. The disqualification commenced on 20 December 2017 and is effective until 20 December 2024.

Mr McFarlane’s ban relates to his selling off company assets for his own benefit whilst creditors were left unpaid. Gilmour McFarlane (29) was the sole director of Garden Haulage Limited. From 2009 the company hired out plant and machinery in addition to labour and carried out contractual work, primarily for farms. The company went into liquidation on 28 August 2015 with an estimated deficiency to its creditors of £38,670.

The investigation by the Insolvency Service found that at a time when the company was insolvent, Gilmour McFarlane caused it to dispose of plant and machinery to a third party for a sum of £55,000 plus VAT while on the same day Gilmour McFarlane settled a personally guaranteed loan to that party. This transaction was to the detriment of HMRC and other creditors of the company.

The investigation also found that for the period from at least 1 September 2014 to 28 August 2015,Gilmour McFarlane failed to preserve or deliver up adequate accounting records for Garden Haulage Limited as a consequence of which it has not been possible to establish the true financial position of the company, how other assets were dealt with and whether all sums due to the company were collected in.

Robert Clarke, Group Leader of Insolvent Investigations North at the Insolvency Service said:

The period of this disqualification reflects the fact that when a company fails to keep adequate financial records it is simply not possible to determine whether there has been other, more serious, impropriety in relation to the management of its affairs.

Furthermore, 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.

Film Producer Whose Company Raised £5 Million From Investors Disqualified

Film producer Michael Lionello Boscardi di Pallavicini di Zoppini Cowan has been disqualified by the court from being a company director for 13 years

Parliament Street

Parliament Street

The disqualification order was made against Mr Cowan following an investigation by the Insolvency Service which also commenced the winding up of Warlord Productions Ltd in the public interest.

Mr Cowan was the sole director of Warlord Productions Ltd a company which raised money from members of the public, who believed they were investing in a feature film, claiming it would have an A list cast. The film was never made.

The official receiver’s investigation uncovered that the company set out to raise £2.5 million for the film Henry 5. Despite raising over £5 million from private investors, little if any of the money was used for film production. Instead, over £3.4 million, went in sales commissions, and of the remaining £1.6 million, £1.15 million was paid to two of Mr Cowan’s other companies and £200,000 towards the purchase of a house without any security being taken.

To make matters worse, for almost half of its investors by value, the company did not keep records who the investers were, or how much they had invested. Consequently, if the film had been made, and had generated profits records weren’t held that would have allowed returns to be made. When it became clear that the film would not be made, the company was not in any position to repay monies raised.

Anthony Hannon, Official Receiver in the Public Interest Unit, said:

Little if any of the large sums raised from the public were used for the stated purposes, and there has been detriment both to the investing members of the public and to the reputation of investment in the UK film industry.

The Insolvency Service will look closely at any evidence of misconduct and take appropriate action where directors have used investor monies for other purposes.

Director Banned For Making Cold Calls To Sell Call Blocking Devices

Leah Kimberley Masters, the sole director of Chichester based Cold Call Elimination Ltd (CCEL), has received a six year ban

Parliament Street

Parliament Street

The Secretary of State for Business, Energy and Industrial Strategy accepted a disqualification undertaking from Leah Kimberley Masters, disqualifying her for six years.

The company was telephoning people to sell a call-blocking device to stop unsolicited calls.

They failed to comply with the rules under the Privacy and Electronic Communications Regulations, resulted in at least 382 unsolicited marketing calls being made to members of the public who were registered with the Telephone Preference Service (TPS) and who had not consented to receive such calls.

In December 2013, the Information Commissioner’s Office (ICO) informed CCEL that it had received complaints from individual subscribers to TPS that they had received unsolicited marketing calls from CCEL. As a result, CCEL were asked about their compliance with the regulations.

In January 2014 the company informed the ICO that it had purchased the data it used to make the calls from a third party and had not itself screened the data against the TPS. The Company suggested that it would put in place further measures to ensure a reduction in complaints regarding unsolicited marketing calls. The ICO placed the company under a 3 month monitoring period, during which time complaints continued.

Following a meeting in August 2014 the company was placed under further monitoring but after an initial improvement complaints continued to be made. Between 14 June 2013 and 31 March 2015 the TPS received 382 complaints. A notice of intent to issue a monetary penalty was issued to CCEL by the ICO in July 2015.

In September 2015 a fine of £75,000 was issued against CCEL for making unsolicited marketing calls to sell cold calling devices.

The fine was not paid by the due date (15 October 2015) and as a result the ICO issued a winding up petition against the company which led to the company entering into voluntary liquidation proceedings on 8 December 2016.

The Insolvency Service is continuing to work very closely with the ICO to take action in cases where these breaches are discovered.

Commenting on the disqualification, David Brooks, Chief Investigator at the Insolvency Service, said:

This is a serious case where the actions of the director and the company have caused distress to members of the public in contravention of UK and EC regulations.

This ban reflects the seriousness of these actions and the robust stance that the Insolvency Service will take against those whose conduct falls below accepted commercial standards.

Andy Curry, Enforcement Group Manager at the Information Commissioner’s Office, said:

The people behind nuisance calls cause upset and distress and we’re in the business of cracking down on them.

We will pursue all options in the event of unpaid fines, and work closely with other regulators such as the Insolvency Service and Claims Management Regulator. The disqualification of a director behind a nuisance call firm is another welcome step in the fight.

Notes to Editors

Leah Kimberley Masters is of Chichester and her date of birth is January 1984.

Cold Call Elimination Limited (Co. No. 08388416) was incorporated on 5 February 2013 and traded as a Telephone Marketing Company at Suite 1 Metro House, Northgate, Chichester, PO19 1BE. Leah Kimberley Masters was the sole director of the company.

The company utilised data obtained from a third party to market an electronic call blocking device that would allow vulnerable people and others to block nuisance calls.

A number of complaints to the Telephone Preference Service and the Information Commissioners office led to contact between the company and the ICO. Following a meeting held in August 2014 between the company and the ICO, concerns regarding the call data, the data suppliers used by CCEL and the outbound calls scripts used were discussed.

In July 2015 the Company received notice from the ICO of their intention to impose a fine of £75,000. The company attempted to appeal but the fine was upheld and in September 2015 the fine was formalised.

In October 2016 the Company became aware of a winding up Petition presented by the ICO for the unpaid fine, and as a result of advice received entered into voluntary Liquidation on 8 December 2016.

At Liquidation the company had assets of £14,000 and liabilities of £145,958 of which £75,000 was due to the ICO.

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

Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.

Persons subject to a disqualification order are bound by a range of other restrictions.

The Insolvency Service, an executive agency sponsored by the Department for Business, Energy and Industrial Strategy (BEIS), administers the insolvency regime, and aims to deliver and promote a range of investigation and enforcement activities both civil and criminal in nature, to support fair and open markets. We do this by effectively enforcing the statutory company and insolvency regimes, maintaining public confidence in those regimes and reducing the harm caused to victims of fraudulent activity and to the business community, including dealing with the disqualification of directors in corporate failures.

BEIS’ mission is to build a dynamic and competitive UK economy that works for all, 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.

The agency also authorises and regulates the insolvency profession, 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.

« Older Entries