Six-year director’s ban for Scottish bar owner

Reporter, Accountancy Daily [2010-2021]

25 Apr 2016

The director of four Scottish bars has been disqualified for six years for failing to address the company’s tax and business rate affairs, resulting in over £130,000 owing to the local council and some £26,000 to HMRC, following an investigation by the Insolvency Service

Claire Fraser was the sole director of CAF (Scotland) Ltd which operated four bars in the Dunfermline and Kirkcaldy area. Having been set up around August 2012, the company ceased trading in early 2014 and went into liquidation in August 2014 with an estimated deficiency to creditors of £186,732.

The company first fell into arrears with its business rates obligations in March 2013. Since that date, the company made payments totalling at least £175,578 to other parties, including its landlord, trade suppliers and other creditors, whilst making no payments to Fife Council or to HMRC for taxes due.

The failure to make any PAYE and National Insurance (NIC) payments to HMRC, resulted in a liability of £25,985. In addition, the Insolvency Service also found that Fraser failed to provide the accounting records for CAF (Scotland) Ltd to the liquidator as required by law.

The Insolvency Service investigation calculated that the failure of CAF (Scotland) Ltd to pay its business rates left a total liability to Fife Council of £130,746.

Without accounting records it was impossible to explain the purpose of payments totalling £186,127 that were paid out from the company’s bank account. These included what cash sales were generated by the four bars operated by the company; what other debts may have been left owing by the company - including to HMRC for VAT; what salary and benefits were taken by Fraser; and the exact dates that CAF (Scotland) Ltd commenced and ceased trading.

Robert Clarke, head of company investigation at the Insolvency Service said: ‘Company directors have a duty to ensure businesses meet their legal obligations, including paying taxes and preserving accounting records.

‘Furthermore, 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. By failing to do this the public cannot be sure that all funds received by the company were used for legitimate purposes.’