Bradford solicitor John Wilson, the director of legal services firm, Lawyours LLP (Lawyours), has been disqualified from acting as a director by the High Court sitting in Leeds for seven years, for failing to pay 0.6m in tax.
Mr Wilsons disqualification, which started on 24 October, follows an investigation by the Insolvency Service. The court did not give him permission to appeal, but he has indicated he will seek approval to do so.
The disqualification prevents Mr Wilson from being a director of a company, or being involved in the management of a company, without the permission of the court until 2020.
Lawyours was the office services arm of Mr Wilsons legal firm which had branches throughout West Yorkshire, including Leeds and Bradford. Lawyours was wound up on 23 June 2010 on the petition of HM Revenue and Customs over tax arrears of around 600,000.
The court found that the billing between Lawyours and Mr Wilsons legal firm was not at all efficient, leaving Lawyours insufficient income to meet its tax bill. At the same time as the tax bill for Lawyours was increasing, the company continued to meet the staff, accommodation and equipment costs on behalf of Mr Wilsons associated law firm.
The court found that Mr Wilson had allowed Lawyours to trade without paying all its tax obligations over a 20-month period despite receiving insolvency advice. This resulted in the company owing HMRC 605,517 for PAYE/NIC and VAT by 23 June 2010.
The court also heard that Mr Wilson allowed Lawyours to credit 700,000 to his legal firm after it was faced with the threat of being wound up by HMRC in August 2009. Mr Wilson described this credit as compensation as the result of Lawyours failing to reduce costs in the recession. The trial judge described this payment as a fair reflection of Mr Wilsons own lack of business, financial and managerial competence.
The associated law firm was wound up in the High Court of on 21 October 2013 following a petition by HMRC for outstanding taxes.
In his defence, Mr Wilson claimed that Lawyours was the victim of the recession and the firms bankers had called in loans to the business. The court found this was not the case but that the bank had, in fact, extended lending to Lawyours to ensure that it could pay staff wages. Mr Wilson had agreed subsequent reductions in the banks lending, which were to his benefit as he had personally guaranteed the overdraft of Lawyours.
Mr Wilson also sought to blame HMRC for not agreeing a payment arrangement with Lawyours. Again, the trial judge dismissed this argument stating that Mr Wilsons payment proposals to HMRC were vague, woolly relied on them accepting vague assurances and vague statements of intent.
In disqualifying Mr Wilson, the trial judge His Honour Judge Kaye (QC) stated:
In my judgment Mr Wilsons conduct in relation to the two allegations of unfitness show incompetence in a marked degree and fall far short of the standards to be expected and encouraged.
I do not say he was dishonest or lacked probity. What he lacked was, as previously described, ability to appreciate his own actions might be wrong, or to take responsibility for his own decisions, instead seeking, unjustifiably, to cast blame on almost everyone with whom he came into contact.
Commenting on the disqualification, John Curbison, the Official Receiver responsible for the investigation said:
The court found that Mr Wilson caused his company to fail to meet its statutory obligations to pay tax which could have been used for public services. Mr Wilson compounded his actions by entering into a transaction for the benefit of his associated business at a time Lawyours was under threat of winding up by HMRC.
The Insolvency Service takes tax offences by companies very seriously and will investigate cases where there is evidence of wrong doing by a company director.