A Bradford solicitor described by a judge as showing 'incompetence in a marked degree' has been disqualified from acting as a director for seven years for failing to pay £600,000 in tax, following an investigation by the Insolvency Service (IS).
John Wilson was the director of legal services firm, Lawyours, the office services arm of his legal firm which had branches throughout West Yorkshire, including Leeds and Bradford. Lawyours was wound up in June 2010 on the petition of HMRC over tax arrears.
The court found that the billing between Lawyours and Wilson's legal firm was 'not at all efficient', leaving Lawyours insufficient income to meet its tax bill. At the same time as the tax bill for Lawyours was increasing, the company continued to meet the staff, accommodation and equipment costs on behalf of the associated law firm.
The court found that Wilson had allowed Lawyours to trade without paying all its tax obligations over a 20-month period despite receiving insolvency advice, and as a result the company owed HMRC £605,517 for PAYE/NIC and VAT.
The court also heard that Wilson allowed Lawyours to credit £700,000 to his legal firm after it was faced with the threat of being wound up by HMRC in August 2009. Wilson said this credit was compensation as the result of Lawyours failing to reduce costs in the recession. The trial judge described this payment as 'a fair reflection of Mr Wilson's own lack of business, financial and managerial competence'.
In his defence, Wilson claimed that Lawyours was the victim of the recession and the firm's bankers had called in loans to the business. The court found this was not the case but that the bank had, in fact, extended lending to Lawyours to ensure that it could pay staff wages. Wilson had agreed subsequent reductions in the bank's lending, which were to his benefit as he had personally guaranteed the overdraft of Lawyours.
Wilson also sought to blame HMRC for not agreeing a payment arrangement with Lawyours. The trial judge also dismissed this argument, stating that Wilson's payment proposals to HMRC were 'vague, woolly [and] relied on them accepting vague assurances and vague statements of intent.'
The court did not give Wilson permission to appeal against his disqualification, but he has indicated he will seek approval to do so.
