Simon Geoffrey Kealy (Mr Kealy), sole director of The Cardiff Restaurant Company Limited (CRC), has been disqualified for 6 years by the High Court on 29 August for trading to the detriment of creditors, in particular HM Revenue & Customs.

Mr Kealys disqualification follows an investigation by the Insolvency Service and prevents him from becoming directly or indirectly involved in the promotion, formation or management of a company for 6 years from 19 September 2014.

Commenting on the disqualification, Sue Macleod, Chief Investigator at The Insolvency Service, said:

This is a case where the director caused the company to continue to incur liabilities so that creditors were bearing all the risk of the companys trading, breaching his duties to both HMRC and trade creditors.

The investigation found that Mr. Kealy failed to ensure that CRC complied with statutory obligations to submit Value Added Tax (VAT) returns to HM Revenue & Customs (HMRC) and make payments in respect of VAT and Pay as You Earn and National Insurance Contributions (PAYE/NIC) from at least 30 September 2010 to 11 April 2012.

The investigation also found Mr. Kealy caused CRC to trade with knowledge of insolvency to the unreasonable risk and ultimate detriment of creditors, in particular HMRC, from at least 20 October 2011 to 11 April 2012, resulting in additional creditor losses of at least 17,695.

The investigation uncovered that:

Mr. Kealy failed to ensure that CRC complied with statutory obligations to submit Value Added Tax (VAT) returns to HM Revenue & Customs (HMRC) and make payments in respect of VAT and Pay as You Earn and National Insurance Contributions (PAYE/NIC) from at least 30 September 2010 to 11 April 2012. In that:
CRC registered for VAT with effect from 1 July 2010
The VAT return for the period 08/10 for 2,620 was submitted on 7 October 2010, following this, CRC failed to submit any further VAT returns; the 11/10 return became overdue after 31 December 2010
As a consequence of CRCs failure to submit VAT returns, HMRC raised central assessments for the periods 11/10 to 05/12 of 26,236
Between 29 April 2010 and 11 April 2012, CRC paid 894 in respect of VAT leading to an estimated liability of 25,011, of which 1,726 was overdue from at least 30 September 2010, and made no payments towards its PAYE/NIC liabilities of 14,020; of which 7,010 was overdue from 19 April 2011 at the latest

Mr. Kealy caused CRC to trade with knowledge of insolvency to the unreasonable risk and ultimate detriment of creditors, in particular HMRC, from at least 20 October 2011 to 11 April 2012, resulting in additional creditor losses of at least 17,695. In particular:
On 19 October 2011 CRC was insolvent; it had no known assets and net liabilities of at least 53,018.
Payments had been returned unpaid by CRCs bank from 17 August 2010 to 19 October 2011 on 81 occasions.
CRC had estimated VAT liabilities of 16,962 and PAYE/NIC liabilities of 11,686 overdue from 30 September 2010 and 19 April 2011 respectively.
On 19 October 2011, HMRC issued CRC with a warning letter threatening the issuing of a Requirement to give Security due to outstanding VAT returns and liabilities.

A trade creditor was in the process of obtaining a county court judgement against CRC with a hearing scheduled for 4 November 2011.
Between 20 October 2011 and 11 April 2012, CRC did not make any payments to HMRC towards its VAT or PAYE/NIC liabilities which increased by an estimated 8,048 and 2,334 respectively. Trade creditors increased by at least 7,313.
A further 74 payments were returned unpaid by CRCs bank and a county court judgment was registered against it.
In comparison, between 19 October 2011 and 22 March 2012, payments totalling 21,382 were made from CRCs bank account to Mr. Kealy and to his personal creditors; of which 4,500 was paid the day before he visited an Insolvency Practitioner on 23 March 2012 and after direct professional advice to act in good faith with his creditors on 23 January 2012.

The court also ordered Mr Kealy to pay costs of 4,935.