Examples of instances where directors have been disqualified


For what reasons do UK directors get disqualified?

This article follows on from my earlier article on director disqualifications to give some idea as to what sort of conduct the authorities consider are worthy of disqualification.

Here are some reported examples of where directors have been disqualified (click on the links in this article to be taken to more information if you should need it)…


Alleged fraud!

An orchestrated attempt to defraud HMRC through the creation of a number of companies to obtain illegal VAT refunds – a blatant fraud on HMRC .

Carousel VAT fraud

Misleading investors

Misleading of investors and misuse of their money

Fresh air invoicing to obtain finance from a bank

Under recording of cash sales resulting in incorrect vat returns being submitted and the non payment of vat

And another similar case!

Vat evasion

Tax evasion


Not doing the right thing in their company at a time of insolvency

Removing assets from the company for their own personal benefit

Unexplained transfers of money out of the company  and accepting money from customers for goods/services not provided

Payment of illegal dividend  and transfer of funds to an associated company

Diversion of money that the company was entitled to into the director’s own bank account

Transfer of large sums of money to themselves 

Another case of transferring large sums of money out of the company to companies they controlled

Using money from the sale of customer assets for their own purposes

Selling company assets for personal benefit

Once a company is either known by the directors to be insolvent (or where the directors should know it’s insolvent), it is vital that the directors don’t do anything that is clearly not in the creditors’ interests.

Perhaps these disqualifications could have been avoided had the directors taken advice from a licensed insolvency practitioner at the right time (and followed that advice)?


Failing to do the basics/comply with laws applying to the ongoing business!

Failing to keep proper books and records to explain the company’s transactions

Misusing company funds for their own benefit 

Another case of misusing company funds for own benefit

Breaking the law on an ongoing basis

Failing to report conflicts of interest

Another failure to comply with the law applying to their business

Acting as the frontman for a person who is banned.

Not doing everything they needed to do to protect vulnerable members of the public

Failing to put in correct tax returns

Breaches of the Privacy and Electronic Communications Regulations

Unfair trading practices and failure to repay the public on a timely basis 

Breach of a previous ban, including the banning of the disqualified’s frontman

Failure to comply with environmental laws

Failure to maintain proper books and records

Breaking the law by employing illegal foreign workers


Other reasons

A series of formal insolvencies each with the same pattern

Come back here often, I will keep adding examples.


Should I be worried about getting banned as a director?

This is a question I’m often asked.  In the vast majority of cases, it really isn’t a worry, but for you while it isn’t the biggest concern you might have over your company’s failure, it’s pretty high on your list.  There are several reasons for this…

First off, let’s explore why you are worrying…

You have probably not recognised that we live in a country that encourages entrepreneurialism, that encourages people like you to have a set up in business.  Without that encouragement our economy would be in tatters, we’d all be working for someone else, not taking any risks.  And being in any business is quite risky, in fact more businesses have always failed than succeed, nowadays with technology moving as fast as it is even more so .  A level of failure is expected by the authorities.  It’s just how you fail…

You probably feel at least some level of personal responsibility for creditor losses.  You have looked back at every decision you did and didn’t make, and assume that if, with hindsight, if you now consider some of those decisions to have been the wrong ones, you are liable to be banned.

For you, the company’s failure is personal, it’s a massive event in your life, one which probably hasn’t happened to you before and thus of which you have no prior experience.  as you are going into uncharted territory, you feel vulnerable.

The figures involved, at least for you, might appear be big, but in the grand scheme of things are often relatively small.  If you don’t have £40,000 to pay your debts, it’s a huge figure for you.  In your mind it might as well be £400,000.  To the outside world there is a huge difference between £40,000 and £400,000.   The level of the problem in your mind could be out of proportion to the actual figures, to the problem in others’ eyes.

Now, let’s look at who the authorities are looking to ban …

Those who are prone to be banned include directors who:

  1. Abuse the principle of limited liability.  Let me explain.  If your company goes into say insolvent liquidation, a good many of its debts are written off, unless you have given a personal guarantee, you’re not liable to pay them.  This is a privilege, and with privileges, there has to be some accountability.  Abuse that privilege, abuse the fact creditors have put their confidence in you by effectively lending money to your company in one way or another and you pay the penalty.
  2. Break the law.  Break any law, for example if you breach health and safety laws, fail to supply merchandisable goods, or commit a fraud on creditors generally or a specific creditor, and you could be banned.  Ignorance of the law is no excuse, you’re expected to know and abide by all the laws that apply to your business.  The reasons for being banned do not have to be financial, operational ones matter too.
  3. ‘Take’ money off HMRC or the general public.  The nature of your creditors matters.  For example HMRC have no choice but to extend credit to your company, so there’s an obligation on you to treat them fairly, especially as regards VAT where you are effectively deemed to have held on to their money.  Get involved in any fraud on HMRC, eg MTIC/carousel fraud, and you will be banned.  If you accept deposits from the Public in advance of supplying them with goods / services but do not protect their money, you’re at risk.
  4. Are involved in certain sectors which are considered rife for fraud or wrongdoing. The sectors continually change as new scams are invented by miscreants.
  5. The size of the failure and regularity of failures with which you are involved.  Directors of bigger businesses and companies going into liquidation with £1m+ debts attract more attention by the authorities and a higher level of skill is expected than say if you are a director of a small corner shop that fails with £50,000 of debts.  If you have a string of insolvent liquidations behind you, whatever the size, the government might form the view that creditors need to be protected from you.
  6. Fail to take, or take but choose to ignore, professional advice, who fail to take advise from a licensed insolvency practitioner in the lead up to insolvency.  The authorities expect you, someone who probably has no prior experience of such difficulties to go and get help, not somehow muddle through, trust to luck or take advice and do what they want to anyway (especially if doing so profits them).

Here’s a link to some government guidance you might like to read – Gov.UK

And here’s a link to a page that’s continually updated where the government publish details of the directors who have been banned in the previous 3 months… Link.  Clicking on the individual bans will give you an idea of where the government’s focus lies.

Here are a few questions for you…

  1. Have you or have you caused the company to break any laws?
  2. Do you owe a lot of money to HMRC?  Have you caused the company to retain and use that money for other purposes?
  3. Should you have ceased trading earlier?  If so, in doing so, have you caused creditors to suffer a larger levels of losses?
  4. Have you somehow taken money or assets out of the company for your own personal gain or that of people you are close with?
  5. Have you treated everyone fairly?
  6. Have you been involved with multiple failures?

If your answer is no to all of these, you’re probably not at risk of being banned, especially if you’ve personally sunk and lost a lot of your own money in the company.  If your answer is possibly, it might be worth you taking some advice, or if I’m to be appointed as your insolvency practitioner, we need to talk early.  If your answer is yes, you might be at risk of being banned, take advice, there are legal firms who specialise in helping directors like you – a Google search on director disqualification solicitors will produce a long list.

We hope that you find this article of help, if all it does is enable you to sleep a bit better at night…







Have you received an APN – an Accelerated Payment Notice – from HMRC?

If you have, you’ll know just how truly horrible they are because the tax has to be paid within 90 days of the date of the notice, there’s no right of appeal and all you can do is make ‘representations’ to HMRC to challenge the APNs on limited grounds – you cannot challenge it because you think it’s either unjust or inappropriate.  If you’ cannot pay the APN, you might need my help.  We’ve also put together a team of very experienced lawyers and tax experts who can help with claims against the professionals who advised you to go into and set up the scheme for which you’re falling foul.

So how many people are effected and how much tax is involved?

HMRC have recently reported that in the year and a half since their introduction in 2014, they have issued 44,000 APNs and collected in £2 billion of tax.  They have also said they expect to issue another 20,000 APNs in 2016, bringing in another £3.5 billion in tax, so the numbers are huge and the size of the individual payments are expected to rise, heaping more pressure on people to pay.

Do HMRC always get it right? Well no… they recently withdrew 2,000 notices that frankly they should never have issued.  They didn’t withdraw them until after a good number of the recipients paid up, even selling their homes to raise the cash.

If you receive an APN and can’t pay, please call me, Paul Brindley, licensed insolvency practitioner, on 01902 672323. 

Other useful links for you to read:

Pinsent’s summary of APNs – probably the shortest and best summary there is on the web.  Choose the download pdf option on that page.

DOTA – a link to the list of schemes for which HMRC has, or will soon, issue APNs.  If you are a member of a scheme that’s on the list, you’re in trouble!  Updated about every 3 months – you need to put it in your diary to look at the updated list every 3 months.  Last list issued January 2016.


The second golden rule is if you have big debt problems is…

‘Only choose an option other than bankruptcy if it better protects your income or assets’

The first golden rule has shown you if you go into bankruptcy, it’s almost certain that you’ll lose no income nor assets.

So, please ask yourself two questions

  • Will bankruptcy see me losing any income or assets that are important to me or my family?
  • Will the other solutions I’m thinking about taking better protect my income or assets?

The key point is that in the real world most other solutions don’t better protect your income or assets than bankruptcy.


Why do it?

Come back here in a week’s time for some other essential facts…

Getting your money out of your company

HM Revenue & Customs have recently announced changes to the way the extra statutory concession, ESC C16, will work from March 2012.

Here’s a link explaining those changes and discussing some of the detail.  And here’s a note from the ICAEW’s tax facility about the apparent conflict between the ESC C16 and Company law.

In practice, if your client needs to extract under £25,000 from his company, you should seriously think about using the extra-statutory concession, as it’s a cheap way of doing things.  If your client needs to extract more than £25,000 the decision becomes more difficult, and a members voluntary liquidation may be needed.  In every case, expert advice should sought as tax is often not the only issue which could determine the most appropriate route.