The director of a Leeds construction company showed a ‘blatant disregard’ for keeping up-to-date accounts, and could not explain mysterious vehicle purchases
Eugenijus Nalivaika, 46, the sole director of Leeds-based construction firm, Niki Contractors Ltd since January 2020, pleaded guilty to failing to keep accounting records at a hearing in February.
He was sentenced to 15 months in prison, suspended for 18 months, when he appeared at Leeds Crown Court last Friday. He was also ordered to complete 250 hours of unpaid work and pay costs of £4,714.30. At the same time he has been banned from acting as a director for seven years.
The business went bust owing HMRC £160,000 in unpaid taxes, including £100,000 in VAT, and £60,000 in PAYE income tax and construction industry schemes (CIS) liability.
Nalivaika also took advantage of government support during the pandemic and had an outstanding £50,000 bounce back loan, taken out from Lloyds Bank, and none of it had been paid back when the company collapsed.
Niki Contractors was wound-up just over a year into Nalivaika’s directorship in May 2021 due to mounting debts.
Investigations by the Insolvency Service found that Niki Contractors made more than 4,300 payments to 614 people labelled ‘wages’ between April 2020 and January 2021. The total cost of these payments was more than £3.7m.
Niki Contractors also made 106 payments totalling £869,670 to purchase vehicles, mainly older commercial vans, between July 2020 and January 2021.
More than £4.5m was paid to Niki Contractors from other companies in the same period.
Nalivaika failed to explain any of the payments and did not deliver company records to the Insolvency Service or the liquidator when requested.
Niki Contractors was liquidated with liabilities of more than £2.5m. Nalivaika’s breaches have prevented the liquidator from being able to investigate the company’s accounts.
Mark Stephens, chief investigator at the Insolvency Service, said: ‘Eugenijus Nalivaika enjoyed the benefits of limited liability while running his business without accepting the responsibilities that come with it.
‘Directors must ensure proper records are kept, filed and preserved. This is to protect consumers and other businesses who have dealings with the company.
‘Nalivaika failed to do this and this sentence sends a strong signal to the business community that such a blatant disregard for keeping your accounts up-to-date will not be tolerated.’