Barred: Directors who ran up big debts caught by officials
Published 16/06/2014 | 08:46
It's a multi-million pound bill which may never be recovered made up of unpaid Vat of £1m –the hefty bill incurred by the former owner of a castle in Portaferry – withheld corporation tax, missed National Insurance contributions and unpaid Paye.
The errant behaviour of 12 directors who ran up company debts of millions of pounds was uncovered by the Department of Enterprise, Trade and Investment and publicised this weekend.
The last few months have witnessed some big-money disqualifications (see panel right for companies' losses) – and the biggest was the £4.7m debt run up by three businesses held by Paul Neill, the former owner of Quintin Castle in Portaferry.
The 56-year-old, who now lives Baltimore in Co Cork, was barred from the boardroom for seven years over misconduct at his three companies – aircraft rental and property firm Kilbright, property company Whincraft and letting company Shinko.
Whincraft went bust owing £2.6m – and as well as failing to keep up with annual returns, it also failed to pay Vat of £1m which had been due for two separate accounting years. Meanwhile, the former directors of building contractor WDL Developments Ltd in Pomeroy, Co Tyrone, have also faced action for their misconduct.
That company went into administration in 2011 owing nearly £840,000, and directors Colin Moore (33) from Burn Road, Cookstown and Pamela Moore (34) of Derrgyonigan Road in the town were disqualified for six years and seven years respectively.
WDL was part of the SHM Group, which borrowed large sums from the Presbyterian Mutual Society.
Pamela Moore's wrongdoing included holding back nearly £400,000 which was due to the Crown in Paye and National Insurance contributions.
Both she and Colin admitted creating false invoices to avoid paying debts to sister company SH Moore, which in turn owed £86,000 to the financial institution.
Economist John Simpson said further court proceedings did not always result from company disqualifications.
"The ultimate sanction would be a prosecution for wrongful trading, implying that a normal person should have known that the actions were likely to leave creditors – including frequently the tax collectors for Vat or income tax and national insurance – unpaid.
"In that sense, disqualification does not always seem stringent enough. However, if there is a disqualified director who has no significant income, useful further penal sanctions might only point to jail or community service."
John-George Willis, the head of the corporate department at law firm Tughans, said he believed that disqualification was "an effective sanction".
He said he frequently advised companies on issues of corporate governance so that directors knew how to conduct themselves within the law.
"Directors' disqualification is a huge blow to a businessperson's reputation – but there are always those who pay no heed to the duties and responsibilities of being a director – and should never have been directors in the first place."