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Directors banned for poor accounting

Two directors of a wholesale sportswear company were disqualified from being directors for poor accounting practices and not paying over an estimated £180,000 in VAT. 

Ronald and Catherine Wilson, directors of Feet First (UK) Limited which traded as Klub Kits Limited, were banned for seven years for failing to keep proper books and records and account for the company’s financial dealings, said the Insolvency Service (IS).

Following an investigation by the IS, Feet First was found to have a number of unexplained transactions owing to its lack of proper accounting procedures.

The authority reported that the company drew 195 cheques worth £177,649 on its bank account, and it wasn't clear whether they were taken out for the benefit of the business.

The Insolvency Service also wasn't able to determine whether all trading income generated by the company between 1 March 2011 and 12 June 2012 had been properly recorded.

The directors also couldn't explain the reason for £14,700 in payments to a family member.

The lack of records made it impossible to establish the true liability owed to HMRC for PAYE/NIC and VAT. Mr and Mrs Wilson had failed to submit VAT returns after February 2010, which resulting in an estimated of £186,410 of outstanding VAT owed when the company was liquidated in June 2012.

In addition to its tax liabilitites at the time of voluntary liquidation, the company also had an estimated deficiency to creditors of £245,181.

Robert Clarke, head of insolvent investigations north, said: "Directors of limited companies have a clear, statutory obligation to make sure that they maintain full and accurate records. Without these it is impossible to verify what has happened to company funds, account for its assets or establish whether directors have acted properly."

If you are worried about an investigation or would like some proactive advice dont hesitate to contact Hayward Wright on 01527 69321 where we would be happy to help.

 

Source- Accountingweb

 

 

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