Ban for boss owing £289K in tax

A recruitment company boss has been banned for six years after paying himself a £150,000 bonus just before the company went into liquidation owing £289,000 in tax

Roy Davies was a director of LTG Recruitment Ltd, which was incorporated in April 2015, and which also used the ‘EMS’ brand name used by Davies for other recruitment companies he owned. 

LTG Recruitment entered into liquidation just a year later in October 2016 and this brought the company to the attention of the Insolvency Service.

Investigators established that between August 2015 and September 2016, LTG Recruitment incurred liabilities owed to the tax authorities which amounted to more than £289,000 at the point of liquidation.

Davies, however, caused the company to loan himself more than £114,000, while also paying more than £38,000 to an associated company.

Further enquiries uncovered that prior to LTG Recruitment entering into liquidation, Davies had caused the company to seek advice from an insolvency practitioner in September 2016 about the future options for the company.

On the same day, however, Davies caused the company to award himself a salary bonus of more than £152,000. After tax, which LTG Recruitment did not pay, Davies’ bonus was £82,000 and this was used to reduce the amount of money he owed to LTG Recruitment.

In addition, £14,000 of the payments made to the associated company was paid after instructions had been given to liquidate the company.

Four other recruitment companies that Davies was also a director of went into liquidation in February 2016, and also owed close to £700,000 to the tax authorities.

Davies also borrowed money from some of the connected companies and owed nearly £300,000 when they entered in liquidation.

Rob Clarke, chief investigator for The Insolvency Service, said: ‘It is bad enough that Roy Davies received substantial payments from LTG Recruitment, leaving the company unable to pay its creditors when the company collapsed.

‘But knowing from the previous failures that he would be pursued for repayment of his loan account, he also took steps to ensure that he would not be required to repay the money he had received when LTG Recruitment went into liquidation.

‘This ban should serve as a warning to other directors tempted to put themselves first, you have a duty to your creditors and if you neglect this duty you could be disqualified and lose the privilege of limited liability trading.’

By Pat Sweet

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