Director Disqualification proceedings for the fraudulent evasion of VAT

FRAUDULENT EVASION OF VALUE ADDED TAX: DIRECTOR DISQUALIFICATION PROCEEDINGS BASED ON ALLEGATIONS OF MISSING TRADER INTRA COMMUNITY (MTIC) FRAUD.  

A worrying trend in the area of director disqualification has emerged with the Secretary of State for Business, Innovation and Skills (‘S of S’), Vince Cable, continuing to seek to disqualify directors and managers of limited companies from holding office, based on the following type of very significant allegation of Unfit Conduct:

“The [director] caused or allowed [his company] to participate in transactions (emphasis added) which were connected with the fraudulent evasion of VAT, that connection being something with which [the director] as the director of the company, either knew or should have known about.”

Immediate problems for the director with these allegations

Such an allegation can cause the following immediate problems for the director in the area of director disqualification:

  • Alleging as it does fraudulent conduct by the director, often attracts a disqualification period of 13 to 15 years (the maximum period for director disqualification).
  •  That allegation, if proved, can destroy the director’s business career, his reputation and his future ability to earn a living.
  • Often refers back to ‘transactions’ that took place as long ago as 2005 – 2007. Memories of why and how things happened all those years ago, will inevitably have diminished and documents that the director might otherwise seek to rely upon as part of his defence, have been lost or destroyed.  Similarly, witnesses of fact may no longer be available for the director to rely upon.  They may have moved away, passed away or simply be disinclined to help.
  •  The allegation takes no account of the very different trading environment, way back then.

What should the well advised director do when faced with these allegations?

In our experience, the director must use the time window afforded to him, after he receives the letter threatening the commencement of proceedings and before the commencement of proceedings, to put his defence case to the SOS in writing, rebutting the allegations with as much evidence as he can put together to support his position.

If that approach fails, he may want to put his case in a face-to-face meeting with the S of S.  Such meetings are often held by the S of S’s Defendant Liaison Team (‘DLT’), at their base here in Birmingham, on our doorstep.

All is not lost. We can help

NDP’s specialist team of director disqualification defence solicitors are best placed to assist the director with that task and to represent him in responding to that letter or representing the director at that meeting which can be a daunting prospect for the director. We are well used to preparing for and attending such meetings.

Our solicitors deal with the Insolvency Service and its solicitors on a daily basis.

Here at NDP we have advised and continue to advise a number of directors in their opposition to such MTIC allegations and have built up a substantial knowledge base of how best to:

  • Gather relevant and important evidence to assist the director.
  • Procure such evidence from HMRC and others, to include the company’s customers, Bankers, suppliers, insurers and carriers amongst others.  All of them are likely to be material witnesses and/or hold useful information that can be deployed by the director in his defence.  HMRC will inevitably have a large volume of relevant documents, many of which may not yet have been disclosed.  The director threatened with disqualification must know what documents to seek, what documents are likely to exist (that may assist his case) and how best to go about obtaining them.  The director should certainly not expect HMRC or the Secretary of State’s solicitors to volunteer up such material.
  • Put together a structured, coherent response to the fraud allegation, designed to persuade the S of S that it is not in the public interest to commence proceedings.
  • Interpret the action (or lack of it) taken by HMRC and/or the S of S against directors of other companies in the supply chain.

NDP’s expert director disqualification solicitors:

  • Have many years of experience of fighting such cases, both in a civil law and criminal law context.
  • Have in the past been instructed by and worked for the S of S in bringing and prosecuting disqualification cases. We know how the department works, which is a big advantage when dealing with them.
  • Are approachable and friendly and available to discuss matters with you on an initial, free of charge basis. However, the sooner you contact us, the more we can do to help.

For a confidential, free of charge first chat, call us on 0121 200 7040, or contact us through this website.

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