Amanpreet Sahota was a director of Dansah Ltd, which was set up in January 2011 to provide labour services via subcontractors to the construction industry.

The company was subject to a winding up order in January 2015 on a petition presented by HMRC and at liquidation had an estimated deficiency of £365,196, made up of VAT of £189,239, corporation tax of £56,000, regulation 13 determinations of £11,002 and penalties, surcharges and interest totalling £91,955.

Dansah’s bank statements show that between 8 February 2012 and 9 February 2015, £922,846 was received and £927,314 was expended of which £9,086 was paid to HMRC.

The Insolvency Service said 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 these ‘suppliers’ of the labour did not have the workforce to have conducted the work claimed by Sahota.

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

Other invoices submitted by Sahota claiming refunds of VAT paid, were issued by another limited company of which he was the sole director. This company was never registered for VAT, and Sahota stated it was dormant and had never traded.

However, despite this he was prepared to present these invoices to HMRC in an attempt to falsely reclaim VAT, the Insolvency Service said.

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. Sahota did not appeal HMRCs findings.

Andrew Stanley, official receiver Chatham at the Insolvency Service, said: ‘Mr Sahota deliberately mislead 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.’

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.