Keith McGilvray, director of Frogfish fish and chips takeaway in Aberdeen, has been disqualified as a director for failing to ensure the company preserved and maintained proper accounting*records.
Mr McGilvray has given an undertaking to the Secretary of State for Business, Energy and Industrial Strategy that he won?t act as a director of a company for seven years from 15 August .
An Insolvency Service investigation found McGilvray ( 53), had failed to preserve the company?s accounting records between January 2014 and August 2015 and failed to maintain accounting records for the period September 2015 and August 2016.
Keith McGilvray was the sole director of Frogfish Limited, on 9 June 2016, when, with liabilities of ?94,808, the company was placed into compulsory liquidation following a winding up petition lodged by HM Revenue & Customs.
Following the liquidator?s appointment the investigation found between 1 January 2014 and August 2015, Mr McGilvray failed to preserve the accounting records of Frogfish Limited and between September 2015 and August 2016 he failed to maintain accounting records during which time he caused the company to trade on a cash basis.
Consequently, in the absence of the accounting records it was not possible to:
verify whether the receipts deposited into the bank account in the period 02 January 2014 and 11 September 2015 totalling ?218,205 were a true reflection of the sale achieved in the period
identify and verify the level of sales achieved in the period 12 September 2015 to August 2016 and what became of the monies achieved from the sales made
verify whether the 83 cheque payments totalling ?35,236 made in the period 07 January 2014 to 21 August 2015 were bona fide company transactions
identify and verify payments made by the company between 28 August 2015 and August 2016; Identify and verify the level of wages paid by the company in the period 20 August 2016 to August 2016 and the resulting liability owed to HMRC in respect of RTI PAYE
identify and verify the level of VAT owed by the company between February 2014 and August 2016
The inability to identify and verify the financial position of the company at liquidation was further exacerbated as a consequence of Mr McGilvray failing to comply with his statutory obligations in that he failed to ensure the company:
prepared and filed annual accounts for the year to 31 December 2014 which ought to have been filed with the Registrar at Companies House by 30 September 2015
prepared and filed VAT returns for 10 consecutive VAT quarters between February 2014 and May 2016 resulting in HMRC issuing VAT assessments and surcharges
filed monthly RTI PAYE information to HMRC in respect of tax years 2015/2016 and 2016/2017 resulting in HMRC estimating the liability owed
Robert Clarke, Head of Company Investigation at the Insolvency Service said:
Directors who operate cash based businesses have to maintain sufficient records to explain where these monies have gone and following insolvency make sure that such records are delivered up for scrutiny by the relevant bodies.
By failing to do this the public can not be sure that all funds received by the company were used for legitimate purposes. The substantial period of this disqualification reflects the fact that when a company fails to keep adequate financial records it is simply not possible to determine whether there has been other, more serious, impropriety in relation to the management of its affairs.
This ban should serve as a reminder to any directors tempted to do the same: the Insolvency Service will vigorously investigate you and seek to remove you from the marketplace.