Two company directors, Mr Arfan Ali Khan and Mr Gerard Burns both from Middlesbrough have been sentenced following the insolvency of a taxi hire company - Thornaby Cars Limited trading as Royal Cars - that they ran.

The convictions follow an initial investigation by the Insolvency Service and a full criminal investigation and Prosecution by the Department for Business, Innovation and Skills (BIS).

Mr Arfan Ali Khan, aged 34, has been sentenced to 16 months imprisonment and disqualified from being a company director for a period of 10 years after pleading guilty to a number of offences.

The offences for which Mr Khan was sentenced at Newcastle-upon-Tyne Crown Court on Monday 20 July 2015, were:
one of fraudulent removal of 150,000.00 worth of company property in anticipation of the winding up of the company
failing to keep adequate accounting records
re-using a prohibited company name

Mr Gerard Burns, aged 69 has been sentenced to 10 months imprisonment (to be suspended for 2 years) and disqualified from acting as a company director for a period of 5 years.

The offences for which Mr Burns was sentenced at Newcastle-upon-Tyne Crown Court on Monday 20 July 2015 were:
one of fraudulent removal of 150,000.00 worth of company property in anticipation of winding up of the company
failing to keep adequate accounting records

The investigation found both Mr Khan and Mr Burns unlawfully transferred 150,000.00 from Thornaby Cars Limited trading as Royal Cars before it was wound up to another company which they controlled when they knew that such an amount was owed to HMRC for unpaid VAT. In doing so, they prevented HMRC from being paid the debt that it was owed.

Both Mr Khan and Mr Burns failed to keep adequate accounting records to show the financial position of Thornaby Cars Limited.

Mr Khan further continued to use the business name Royal Cars previously used by Thornaby Cars, when its use had been prohibited for a period of 5 years from 28 July 2010.

In addition to these actions, confiscation proceedings are ongoing.

Deputy Chief Investigative Officer, Mr Simon Button from the Department for Business, Innovation and Skills said:

The Insolvency Service and The Department for Business, Innovation and Skills will take firm action when we find that Company Directors have abused the trust that the public expect from them when they hold such a responsible position.


Both Mr Khan and Mr Burns were clearly aware that the money belonged to the company and its creditors, and was not theirs to do with as they wished.