Could Early Advice Prevented an 11 Year Directors Ban?
The story of a director of a haulage firm receiving an 11-year director’s ban after he falsified VAT claims in order to try and save his business, when it hit a difficult time, is a classic tale of a director thinking he can cheat the system to buy some time.
Often Directors justify their actions by believing they are a temporary fix until their company situation improves. There are times in a business when unfortunate things happen outside of your control, getting advice early can help save your business or at worst minimise the loss. Often Directors are too scared to approach insolvency practitioners and only seek advice as a last resort. In fact, Insolvency Professionals will always explore all the options available to help the company suggesting insolvency only after all other solutions have been considered.
While much has been done in the industry to emphasise the business recovery aspects of the profession the unfortunate perception remains that insolvency practitioners are only interested in closing your business down. Sadly, this stigma means Directors often leave it too late to get advice, the longer the company struggles on, the fewer recovery options are available, early intervention is the key to survival.
David Cooper, 55 from Northumberland was a director of CFM Transport (CFMT). After 30 years as an HGV driver and mechanic, Mr Cooper took his knowledge of the HGV business and moved into the road haulage sector forming CFMT in 2011.
Initially the business did well and expanded into European markets, creating two new businesses, CFM Cargo Logistics Ltd and CFM Continental Ltd. Unfortunately, in 2015 one if the company’s vehicles was involved in an accident abroad. Having a vehicle off the road, and insurance payments and the companies’ petroleum tax refund entitlement taking time to come through left the companies in financial difficulty. To try and keep the companies a float Mr Cooper deliberately submitted a false return in order to claim VAT which the companies were not entitled to.
Mr Cooper was convicted of “being knowingly concerned in fraudulent evasion of VAT”, totalling £148,228 and on 15 June 2017 he was sentenced to 16 months imprisonment, suspended for 24 months.
Following this in October 2018, the Secretary of State accepted a disqualification undertaking from David Cooper after he admitted creating and submitting false returns. His ban will last 11 years.
There is no doubt that Mr Cooper did wrong by falsifying his VAT and HMRC will always be hard on directors that deliberately try to mislead them. Mr Cooper’s actions did not buy him some time, they led to the collapse of an otherwise successful business. Getting advice early could provide a solution to saving the company or at the least manage and limit impact in terms of financial or even legal exposure.
If your company is experiencing financial issues, by speaking to us early more often than not there are various options to consider to help a business trade out of difficulty. Those businesses that seek early advice are more likely to avoid a formal insolvency procedure and can turnaround their business.
Please contact us for more information about how we may be able to help.