Claire Fraser, director of CAF (Scotland) Ltd, has been disqualified from acting as a director of a limited company for 6 years for failing to address the companys tax and business rate affairs.
An investigation by The Insolvency Service found that CAF (Scotland) had failed to make payments of taxes due to HMRC, business rates to Fife Council and did not preserve the accounting records of the company.
Claire Fraser (32) was the sole director of CAF (Scotland) Ltd, which had a registered office of 15-17 Bruce Street, Dunfermline, Fife, KY12 7AG. The company was incorporated on 26 July 2012 and began trading in around August 2012. The company operated 4 bars in the Dunfermline and Kirkcaldy area, named Life (Kirkgate, Dunfermline), Fabric (Canmore Street, Dunfermline), Caf D (Bruce Street, Dunfermline) and Caf K (Hill Place, Kirkcaldy). The company ceased trading in around early 2014 and went into liquidation on 13 August 2014 with an estimated deficiency to its creditors of 186,732.
The Insolvency Service investigation calculated that the failure of CAF (Scotland) Ltd to pay its business rates left a total liability to Fife Council of 130,746. Furthermore, CAF (Scotland) Ltd made no Pay As You Earn (PAYE) and National Insurance (NIC) payments to HMRC, resulting in a liability of 25,985.
CAF (Scotland) Limited first fell into arrears with its business rates obligations on 16 March 2013. Since that date, the company made payments totalling at least 175,578 to other parties, including its landlord, trade suppliers and other creditors, whilst making no payments to Fife Council or to HMRC for taxes due.
The investigation by The Insolvency Service also found that Claire Fraser failed to provide the accounting records for CAF (Scotland) Ltd to the Liquidator as required by law.
Without these records it has not been possible to explain:
the purpose of payments totalling 186,127 that were paid out from the companys bank account
what cash sales were generated by the 4 bars operated by the company
what other debts may have been left owing by the company - including to HMRC for Value Added Tax
what wages and benefits were taken by Claire Fraser
the exact dates that CAF (Scotland) Ltd commenced and ceased trading
Robert Clarke, Head of Company Investigation at the Insolvency Service said:
Company directors have a duty to ensure businesses meet their legal obligations, including paying taxes and preserving accounting records.
Deliberate neglect of tax affairs is not a victimless action, as it deprives the taxpayer of the funds needed to operate public services and allows companies to gain an unfair advantage over other businesses who are doing the right thing and paying the money they owe.
Furthermore, 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 Insolvency Service will take action against directors who do not take their obligations seriously and abuse their position of trust.