Article provided courtesy of The insolvency Service

Trader of electronic goods retained no records, leaving tax bill of more than £2.7 million unpaid and no explanation for transactions totalling nearly £5 million.

Colin Hulme, 44, from Stoke-on-Trent, was sentenced to 12 months imprisonment, suspended for 24 months, at Stoke Crown Court on 4 August 2023, after failing to keep accounting records for his business. He will also have to undertake 150 hours of unpaid work in addition to his sentence, and pay £5,000 towards prosecution costs.

Hulme was sole director of KDM & Sons Ltd, which bought and sold PlayStations, mobile phones and computer hard drives, from April 2016 until the company went into liquidation in 2017.

However, following the company’s closure, Hulme failed to deliver up sufficient company records to either the liquidator or the Insolvency Service to establish why the business had failed, or even when it had ceased trading.

Hulme had previously claimed that he had handed over three boxes of books and records to the liquidator’s offices in Sutton Coldfield, yet there was no record of this delivery.

Julie Barnes, Chief Investigator at the Insolvency Service, said:

Any business owner should ensure they have proper financial record keeping in place, but for directors of limited companies this is a specific legal requirement.

There are no excuses and as Colin Hulme has discovered, a failure to do so can and will result in a criminal conviction.

Without the necessary invoices or cash book, neither the liquidator nor the Insolvency Service investigators were able to determine whether deposits of approximately £2,218,300 into the company’s bank account between June 2016 and June 2017 were from genuine sales of electronic equipment, nor whether outgoings of around £2,236,800 from the same account were legitimate business expenditure.

At the end of November 2016, the company owed £2,776,209 in tax. This amount was never paid, and the court heard that investigators were not able to establish whether the tax assessment should in fact have been higher. Nor could the accuracy of the company’s Statement of Affairs, submitted to Companies House, be verified, so investigators were unable to determine whether the company had any recoverable assets to pay back creditors.

Hulme had earlier accepted a disqualification undertaking from the Secretary of State in August 2019, but was later charged with a breach of the Companies Act 2006 due to the criminal nature of his misconduct. He was sentenced by Recorder Macadam.

This article is provided courtesy of The Insolvency Service

Two businessmen from East Sussex and Essex falsely claimed maximum £50k Bounce Back Loans and used money for their own gain.

Azmi Shafi Ahmed, 28, from Grays, Essex, and George David Festivus Pinnegar, 31, from East Grinstead have been disqualified for a total of 17 years after each claimed the maximum £50,000 Bounce Back Loans for their businesses and used the money for personal gain.

Ahmed was the sole director of AZ Financials Ltd, trading as a bookkeeper from Ludgate Hill in London. In July 2020 he applied for a £50k Bounce Back Loan for the company, after claiming that its previous year’s turnover had been £200,000.

But the Insolvency Service began an investigation into the director’s conduct after AZ Financials Ltd went into liquidation in November 2022, owing the full amount of the loan.

Investigators found that the company’s turnover in the previous year had in fact been less than £40,000. Ahmed had exaggerated the figures in the loan application by at least five times the true amount, to claim over £40,000 more than the bookkeeper had been entitled to.

They also discovered that three days after the money arrived in the company’s account, Ahmed transferred the full £50,000 to his personal bank account.

Ahmed has now repaid £25,000 to the company’s liquidator, and the remainder will be repaid in June 2023.

Lawrence Zussman, Deputy Head of Company Investigations at the Insolvency Service, said:

The Bounce Back Loan scheme was designed to support active businesses through the pandemic.

Azmi Ahmed and George Pinnegar exploited this support and abused the public purse for personal gain.

These bans show that abuse of taxpayers’ money will not be tolerated, and rogue directors will be prevented from running a business.

In a separate case, George Pinnegar, sole director of London Sound Engineering Ltd, also applied for a £50,000 loan for his company in July 2020, after claiming the estimated turnover for the previous year to be £250,000. Under the rules of the scheme, if a business began trading after 1 January 2019, its estimated annual turnover could be used to claim a loan.

The business traded as a sound engineering firm from Hammerwood Park in East Grinstead – although the company was listed on Companies House as a temp agency. It went into liquidation in August 2021, still owing the full amount of the loan.

Insolvency Service investigators discovered that the company had filed dormant accounts which showed that London Sound Engineering Ltd had not been actively trading on 1 March 2020 – one of the criteria required to apply for a Bounce Back Loan.

They found that Pinnegar had transferred almost £38,000 of the loan money to his personal bank account over a period of six months. And he paid the remaining £12,000 into the bank account of a connected company.

The company’s liquidator is currently working to recover the funds.

Azmi Ahmed’s 6-year disqualification began on 13 June 2023 and George Pinnegar’s 11-year ban started on 20 June 2023. The bans prevent them from becoming involved in the promotion, formation or management of a company, without the permission of the court.

Article provided courtesy of The Insolvency Service

Zafar Khan, who served as Carillion’s finance director, has been disqualified as a director for 11 years.

An Insolvency Service spokesperson said:

“The Insolvency Service, acting on behalf of the Secretary of State for Business and Trade, has accepted a disqualification undertaking from Zafar Iqbal Khan for 11 years for his conduct as a director of Carillion Plc (“PLC”).

“As the litigation against the remaining directors is ongoing, with a trial set to commence the week of 16 October 2023, the Insolvency Service is unable to comment any further.”

Background information:

• Further details can be found in the director disqualification register.

1. Mr Khan caused PLC to rely on false and misleading financial information for the preparation of consolidated Financial Statements for 2016 which Financial Statements did not give a true and fair view within the meaning of section 393 of the Companies Act 2006 and did not comply with International Accounting Standard (IAS) 11, IAS 18, IAS 32, IAS 38 and the IFRS Framework for Financial Reporting, and resulted in the material misstatement of profits in relation to the performance of five major construction contracts (namely, Royal Liverpool University Hospital; Battersea Power Station; Aberdeen Western Peripheral Route; Midlands Metropolitan Hospital; and Msheireb Phase 1(B)) and transactions entered into with a third party, Wipro. The quantum of the misstatement is assessed as at least £208.5m, together with an adjusted year end loss of, at least, £(61.7m) in contrast to PLC’s reported profit before tax of £146.7m.
2. Mr Khan caused PLC to make Market Announcements on 01 March 2017 and 03 May 2017 which were misleading as to the reality of Carillion’s financial performance, position and prospects, and were in breach of Listing Rule 1.3.3R and Article 15 of the Market Abuse Regulation.
3. Mr Khan caused PLC to make the 2016 final dividend payment of £54.4m, which was paid on 09 June 2017, which payment could not be justified by reference to the FY2016 Financial Statements because those Financial Statements did not give a true and fair view. Furthermore, the 2016 final dividend payment was not in the interests of PLC, its members or its creditors and was not one that PLC could reasonably afford to make in view of its true financial performance.

Article provided courtesy of The Insolvency Service

James Ireri, 44, from Surrey, has been banned for seven years after abusing two different Covid loan schemes during the pandemic.

Ireri was the director of Safi Care Ltd, which traded as a recruitment business from Surrey, supplying staff to care homes, from its incorporation in February 2015 until it went into liquidation in August 2021. The company had first traded as Safi Services Ltd until March 2016.

In May 2020, Ireri applied for a £50,000 Bounce Back Loan – the maximum amount allowable – for the company.

Bounce Back Loans were a government scheme to support businesses during the COVID-19 pandemic, whereby companies could apply for loans of up to 25% of their 2019 turnover, up to a maximum of £50,000.

Yet in August 2020, Ireri applied for another loan of £100,000 on behalf of Safi Care Ltd, this time from a different lender, and through a different Covid support scheme, the Coronavirus Business Interruption Loan.

Under the rules of the Covid loan schemes, eligible businesses were able to apply for a single loan under one or the other of the schemes, but not both. However, a business could obtain a second loan if the money was used to repay the first in full.

But when Safi Care Ltd went into liquidation in August 2021, the company owed more than £231,500, including the full amount of both loans.

An investigation by the Insolvency Service was triggered, but Ireri failed to provide adequate company accounts and investigators were unable to determine whether Safi Care Ltd had ever been eligible to apply for the initial Bounce Back Loan, based on the company’s 2019 turnover.

The lack of company books also meant that Ireri was unable to prove that he had used the loan money for the economic support of the business – another condition of the scheme.

Investigators discovered that more than £491,300 had been withdrawn from the company bank account between May 2020, when the first loan was received, and July 2021, shortly before Safi Care went into liquidation, including more than £80,000 for personal spending and around £93,900 of transfers into Ireri’s personal bank accounts.

The Secretary of State accepted a disqualification undertaking from James Ireri after he did not dispute he had caused Safi Care Limited to breach the terms of two Covid Support loans by failing to repay the Bounce Back Loan after obtaining the Interruption Loan, and by failing to provide adequate evidence of the company’s turnover or how the loan funds were used.

His ban started on 8 December 2022, and lasts for seven years. The disqualification prevents him from directly or indirectly becoming involved in the promotion, formation or management of a company, without the permission of the court.

Neil North, Deputy Head of Investigation at the Insolvency Service, said:

“Bounce Back Loans and Covid Business Interruption Loans were designed to provide vital support for viable businesses through the pandemic. James Ireri abused not one, but two of these schemes.

“His ban should serve as a warning to other directors who misuse financial support available to companies that the Insolvency Service is able to bring your actions to account and remove you from the corporate arena.”

Article provided courtesy of The insolvency Service

Michael Andrew Higgins, 56, and Dean Emanuel Miller, 41, both from Sheffield, have been disqualified as company directors for a total of 17 years after separate Insolvency Service investigations found that through their respective companies they had each abused the covid loan support scheme.

Michael Higgins was sole director of Steel Rigging Ltd, which traded as a company providing driving services for vehicles on outside TV broadcasts, from its incorporation in March 2015 until it went into liquidation in December 2021.

In November 2020, Higgins applied for a £20,000 Bounce Back Loan to support his business through the Covid-19 pandemic, stating on the application that the company’s turnover for 2019 had been £80,000.

Bounce Back Loans were a government scheme to support businesses during the Covid-19 pandemic, in which companies could apply for loans of up to 25% of their 2019 turnover, to a maximum of £50,000.

Under the rules of the scheme, any loan money allocated was to be used for the economic benefit of the business, and not for personal purposes.

But Steel Rigging Ltd went into liquidation in December 2021, owing £23,900 – including the full amount of the Bounce Back Loan – and prompting an investigation by the Insolvency Service.

Investigators found that the company’s turnover had in fact been just under £40,000 in financial year ending 31 March 2019, and around £43,100 for the following financial year, meaning that the company had claimed at least £9,200 more in loan money than it was entitled to.

They also discovered that Higgins had transferred the £20,000 to his own bank account over a period of 3 weeks in January and February 2021, without any evidence to show that these funds were used for the benefit of Steel Rigging Ltd.

And in a separate case, Dean Miller, sole director of IBODYTALKS Ltd, an online health and fitness business also based in Sheffield, applied for a £42,000 Bounce Back Loan for his company in May 2020.

Miller stated in the application that the firm, which was incorporated in April 2019, had been dormant until April 2020, and used a predicted turnover of £168,000 to apply for the loan. Under the rules of the scheme, businesses incorporated after 1 January 2019 were asked to estimate their turnover.

But the company went into liquidation in October 2021 owing more than £40,000, triggering an Insolvency Service investigation.

Investigators discovered that IBODYTALKS Ltd had in fact been trading since December 2019, after finding that five deposits totalling £588 had been made into the company bank account between then and April 2020.

They calculated that IBODYTALK’s projected turnover for the year could only have been around £101,100, meaning that it had received more than £16,700 of loan money to which it had not been entitled.

Investigators also found that in June 2020, a month after the company received the loan, Miller transferred £41,000 to a connected company, and did not provide any evidence to show the money was used for the benefit of IBODYTALKS Ltd.

The Secretary of State for Business, Energy and Industrial Strategy accepted disqualification undertakings from the two directors, after both did not dispute that they had caused their companies to receive Bounce Back Loans to which they were not entitled, and failed to show that the money had been used for the economic benefit of their companies..

Michael Higgins’ disqualification lasts for 8 years and started on 3 January 2023. Dean Miller was banned for 9 years, beginning 1 February 2023. The disqualifications prevent them from directly or indirectly becoming involved in the promotion, formation or management of a company, without the permission of the court.

Lawrence Zussman, Deputy Head of Company Investigations at the Insolvency Service, said:

Covid support schemes were a lifeline to businesses across the UK, protecting jobs and preserving businesses.

Michael Higgins and Dean Miller abused the scheme, and their lengthy bans should serve as a reminder to others that the Insolvency Service will not shirk from its responsibility in taking action in order to protect the public and the taxpayer.

Article provided courtesy of The Insolvency Service

Rukia Begum, 46, from Oldham, and Simon Grant Gorgin, 63, from Kings Langley, have been disqualified for a total of 22 years after each separately claimed tens of thousands of pounds in covid support loans to which their companies were not entitled.

Begum was the sole director of New Polash Oldham Ltd, which traded as a takeaway from its incorporation in September 2018 until the company was dissolved in October 2020.

In May 2020, Begum applied for a £35,000 Bounce Back Loan for New Polash, stating that the takeaway’s turnover for 2019 was £154,000.

Bounce Back Loans were a government scheme to support businesses during the Covid-19 pandemic, in which companies could apply for loans of up to 25% of their 2019 turnover, to a maximum of £50,000.

Under the rules of the scheme, companies had to have been trading by 1 March 2020, and be actively trading at the time of the application. Any loan money allocated was to be used for the economic benefit of the business.

Two months after receiving the Bounce Back Loan, Begum applied to dissolve the company. She signed the application form, despite this stating that a failure to notify any creditors was an offence. When the Insolvency Service began its investigation in July 2020, the company owed the full amount of the loan.

Investigators found that Begum had exaggerated the turnover of her company by around £110,400, and that New Polash Oldham Ltd was only entitled to a Bounce Back Loan of around £11,000 based on the takeaway’s actual turnover.

She had also allowed the takeaway to continue trading in the three months before her application to dissolve New Polash Oldham Ltd – a breach of the Companies Act 2006.

In a separate case, Simon Gorgin, applied for a £45,000 Bounce Back Loan for his company, P3 Estates Ltd, in May 2020. Gorgin was sole director of the company, from its incorporation in April 2010 until it was dissolved in December 2021.

Gorgin stated on the loan application that P3 Estate’s turnover in 2019 had been £180,000. A loan of £45,000 arrived in the company’s bank account the following day.

However, in April 2021 he applied to dissolve the company, and by December of the same year, when the company was dissolved, the full amount of the loan remained outstanding, prompting an investigation by the Insolvency Service.

Investigators discovered that P3 Estate Ltd had never traded, and had not been trading at the time of the loan application and so had not been entitled to receive any money under the scheme.

They also found that three days after the loan arrived in the company’s account, Gorgin had further breached the rules of the scheme by transferring the full £45,000 to his own bank account.

And Gorgin failed to notify the bank from which he had borrowed the money that he had applied to strike off the company – breaching a legal obligation for directors to notify creditors when dissolving their business.

The Secretary of State for Business, Energy and Industrial Strategy accepted disqualification undertakings from the two directors, after both did not dispute that they had caused their companies to receive Bounce Back Loans to which they were not entitled.

Simon Gorgin also did not dispute he had failed to cause his company to falsely apply for a Bounce Back Loan when it was not actively trading, failed to ensure the money was used for the economic benefit of the business and failed to give the required notice to the bank of the dissolution of his business.

Rukia Begum’s disqualification lasts for 10 years and starts on 9 February 2023. Simon Gorgin was banned for 12 years, starting on 5 January 2023. The disqualifications prevent them from directly or indirectly becoming involved in the promotion, formation or management of a company, without the permission of the court.

A compensation order is being recommended to recover the money from both directors.

Peter Smith, Deputy Head of Dissolved Company Investigations at the Insolvency Service, said:

Bounce Back Loans were designed to help businesses to survive the pandemic. Rukia Begum and Simon Gorgin abused the scheme and took taxpayers’ money at a time when many businesses were in genuine need.

Their lengthy bans should stand as a warning that we will take action against directors who abuse government support schemes.

Article provided courtesy of The Insolvency Service

Kulwinder Singh Sidhu, 58, from Stanwell, has been sentenced to 12 months imprisonment, after pleading guilty to offences under the Companies Act and the Fraud Act, having abused the Bounce Back Loan financial support scheme in 2020.

Sidhu was director of Wavylane Ltd, a haulage company based in Stanwell, and which had been trading since 2010.

On 9 June 2020 Sidhu applied for a £50,000 Bounce Back Loan from his bank on behalf of his business. Under the Bounce Back Loan scheme, genuine businesses impacted by the pandemic could take out interest-free taxpayer-backed loans of up to a maximum of £50,000.

The loan was paid into the company bank account and on 26 June 2020 Sidhu filed paperwork with Companies House to have the business dissolved, having transferred the funds to his personal bank account within two days of receipt.

The striking-off application to dissolve the company was explicit that interested parties and creditors, such as a bank with an outstanding loan, must be notified within seven days of making an application to dissolve a company. The form also highlighted that failure to notify interested parties is a criminal offence, however Sidhu did not follow these rules.

The company was dissolved in October 2020, and was subsequently identified as likely Bounce Back Loan fraud by the Insolvency Service and cross-government counter-fraud systems.

The Insolvency Service investigation found that Sidhu had fraudulently overstated the company turnover in the Bounce Back Loan application, and within two days of receiving the money he had transferred it to his personal account before dispersing the funds to his son and another company.

He pleaded guilty to charges under the Companies Act 2006 and Fraud Act 2006 at Guildford Crown Court on 19 December 2022. He was sentenced on 13 February 2023 at Guildford Crown Court.

The court imposed a confiscation order for £50,000, and Sidhu has paid this in full.

In addition to the custodial sentence, Sidhu was also disqualified as a director for six years.

Julie Barnes, Chief Investigator at the Insolvency Service said:

Our action has ensured repayment of the loan money and taxpayers have not been left out of pocket.

Any other company directors who might be tempted into dissolving their business to try to keep public money they are not entitled to, should be aware they are risking a lengthy prison term.

Article provided courtesy of The Insolvency Service

Thomas Whyte, 76, from Carluke, was the sole director and shareholder of Fortress Restructuring Ltd until it was wound up following an Insolvency Service investigation in February 2021.

In May 2020, Whyte applied for a £50,000 Bounce Back Loan for the company, stating on the application that its turnover was £250,000.

In October 2020 representatives of Fortress Restructuring Ltd advised the Insolvency Service that it had no trading address, had never traded and was not currently trading.

Following the liquidation, investigators discovered that up to the end of April 2019, accounts filed with Companies House showed that Fortress Restructuring Ltd was dormant, and the company’s only asset was £100 share capital.

On the day Whyte applied for the loan, the company in fact had just £203 in its bank account, and less than £1,000 had been received into it over the preceding year.

The Secretary of State for Business petitioned for the company to be wound up in the public interest, and the petition was presented at the Court of Session and issued publicly in the Gazette on 1 February 2021, with a copy emailed to Whyte four days later.

Thomas Whyte denied to the Insolvency Service that he had received the petition until late February, although he acknowledged receipt of the email on 5 February 2021, and between 5 and 16 February the balance on the company bank account reduced from £28,150 to a little over £1,590 with payments made to Whyte, the company accountant and others.

The Secretary of State accepted a disqualification undertaking from Thomas Whyte on 7 February 2023 after he did not dispute he had applied for a Bounce Back Loan for his company to which it was not entitled, and had disposed of substantial funds when he knew, or ought to have known, the company was being wound up.

His ban begins on 28 February 2023 and lasts for 10 years. The disqualification prevents him from directly or indirectly becoming involved in the promotion, formation or management of a company, without the permission of the court. The Insolvency Service investigation did not find evidence that warranted any disqualification action against any other individuals in relation to Fortress Restructuring Ltd.

The company’s liquidator has recovered £37,500 from Whyte towards the £50,000 owed.

Rob Clarke, Chief Investigator at the Insolvency Service, said:

Bounce Back Loans were for trading companies adversely affected by the pandemic and to be spent on legitimate business expenses.

The fact that Fortress had filed dormant accounts, and only £949 had passed through its bank account should have made it abundantly clear to Thomas Whyte that his company was not entitled to a £50,000 loan, yet he took it anyway and used the majority of that money for his own benefit.

We thank the liquidator for their efforts which have seen £37,500 recovered, and repeat that we will not hesitate to take action against directors who have abused Covid-19 financial support in this manner.