The director of an Aberdeen-based company set up to market a fuel-saving device has been disqualified for six years for failing to maintain and preserve proper accounting records, after an Insolvency Service investigation found inadequate documentation of some £275,000 of expenditure
Upul Kulasinghe was the sole director of Pure Strategic Ltd, which was set up in February 2004 and was placed into compulsory liquidation in October 2013 with debt of £59,165, following a winding up petition lodged by HMRC.
The investigation found that for the period from at least 20 October 2011 to 30 October 2013, the company’s books were inadequate to verify expenditure from the company bank account totalling £274,346 or verify whether receipts into the company bank account totalling £296,617 were a true representation of the sales achieved by the company.
It was not possible to verify whether the company owned or disposed of any assets, other than those realised by the liquidator, and if so, what their value was, nor was it possible to establish the true level of liabilities owed to HMRC, or verify the nature and purpose of personal withdrawals totalling £110,500.
In addition, there was not sufficient information to verify the number and nature of any employees and the extent of any consequences on PAYE and National Insurance contributions (NICS).
The Insolvency Service said effects to find out what had happened had been hampered further as a result of Kulasinghe failing to lodge with the liquidator’s a statement of affairs for Pure Strategic or ensure that the company complied with its statutory obligation to file accounts with Companies House, from the date of incorporation.
Robert Clarke, head of company investigation at the Insolvency Service said: ‘Keeping proper records is a pivotal duty for directors and there is no place in the business environment for those who neglect their responsibilities in this area and cover up the activities of the companies they manage.
‘The lack of records in this case made it impossible to determine whether there was other, more serious misconduct at Pure Strategic and that is reflected in the period of the disqualification.’
HMRC told Accountancy: 'Most businesses pay their taxes, but when a business goes under, the public purse may be left with large irrecoverable tax debts. HMRC, like any other creditor, has a duty to work with insolvency practitioners to work out whether the directors acted correctly at all times.
'From 6 April 2012, HMRC can require employers to pay a security where there is serious risk, based on past behaviour that they will not pay their PAYE or Class 1 NICs.'
