Nagaratnam Rathapathiranathan, the sole director of Capital Autos Ltd, a car repair and MoT garage in East Ham, London, has been banned from acting as a director for six years for failing to pay VAT or keep proper accounts. The disqualification follows an investigation by The Insolvency Service.
Mr Rathapathiranathan, 56, has given an undertaking to the Secretary of State for Business, Innovation and Skills that he will not act as a director of a limited company from 29 November 2012 to November 2018.
The investigation showed that Capital Autos Ltd was a serial tax dodger. HMRC had issued three winding up petitions against the company – the latest being in April 2008 – because of unpaid taxes. In each case, the company paid the tax or reached a financial agreement with HMRC. The last payment was made it July 2008.
Mr Rathapathiranathan therefore understood the need to pay VAT and submit returns. But rather than mend his ways, Capital Autos Ltd continued to trade without paying VAT and racked up a fresh debt of over 264,000 to HMRC.
Capital Autos Ltd entered into a Company Voluntary Arrangement (CVA) in October 2009 and still failed to submit or pay VAT returns – a specific breach of the CVA. In a further breach of the CVA, Mr Rathapathiranathan caused the company to make loan repayments to himself in excess of 55,000 thus putting himself ahead of other creditors in direct contravention of the CVA.
Mr Rathapathiranathan also failed to ensure that Capital Autos Ltd kept adequate accounting records and therefore cheque payments of over 465,000 could not be accounted for.
Claire Entwistle, Director of Company Investigations said:
Mr Rathapathiranathan failed to ensure that his garage paid VAT to HRMC, while continuing to collect it from customers. Mr Rathapathiranathan also sought the protection of a Company Voluntary Arrangement, with his creditors but failed to abide by its terms.
Furthermore, Mr Rathapathiranathan did not keep accurate accounts for the company so a large number of cheque payments were made with no proper record of where the money went.
The public can rest assured that The Insolvency Service will seek to take action against directors who do not competently run a limited company to ensure that they do not abuse the privilege of limited liability protection.