Ambia Begum was the sole director of Lochnagar Indian Brasserie, a licensed Indian restaurant in Ballater when it was placed into compulsory liquidation with debts of £424,962, following a winding up petition lodged by HMRC.

Following the liquidator’s appointment, the investigation found that from December 2011 to July 2014, the company’s books were inadequate.

This meant it was not possible to verify expenditure from the company bank account totalling £276,783, or to verify whether receipts into the company bank account, of £276,783, were a true representation of the sales achieved by the company, especially as, due to the nature of the business, a significant proportion of the sales were likely to have been cash.

The liquidator was also unable to verify whether the company owned, or had disposed of, any assets and if so, what their value was, nor establish the true level of liabilities owed to H MRC or whether the company should have been registered for PAYE and NIC.

Robert Clarke, head of company investigation at the Insolvency Service said: ‘Directors who operate cash based businesses have to maintain sufficient records to explain where these monies have gone and following insolvency make sure that such records are delivered up for scrutiny by the relevant bodies.

‘The substantial 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.’

HMRC background note:

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.