Insolvency Service cuts off cold-calling director for 12 years

The director of a telephone cold-calling service which collapsed owing some £2m has been given a 12-year disqualification, after an Insolvency Service investigation found he owed HMRC over £400,000 and had claimed over £30,000 in an unmerited grant application

Tony Abbott was the sole director of Reactiv Media Ltd, a Halifax-based marketing company which made unsolicited calls for direct marketing purposes and stated it owned and maintained one of the largest databases for UK consumers, being able to target campaigns for various entities from sole traders’ to blue-chip organisations.

The company went into liquidation in April 2016 with estimated creditor claims totalling over £2m.

During the subsequent investigation, Abbott did not dispute that he had failed to ensure that Reactiv Media provided accurate information in a Leeds City Region Enterprise Partnership (LEP) grant application, leading to an unmerited payment of £33,941, and that he allowed the company to trade to the unreasonable risk and ultimate detriment of HMRC and to his benefit, while it was insolvent.

In February 2015, Reactiv Media claimed a £50,000 grant, based on 10% of total applicable expenditure of £500,000. Invoices totalling £459,610 were scheduled and attached to the claim received by the LEP. The invoices (before VAT) totalled £383,420.

The schedule included three invoices from January 2015, of which copies provided to the LEP were signed by Abbott, which total £339,418 before VAT. The grant was based on 10% of the net value of eligible invoices supplied, so the three invoices represented £33,941 of the claim.

These three invoices are not reflected in the company purchase ledgers, the sales ledgers of the two suppliers concerned and the suppliers have confirmed that they did not issue any such invoices.

Reactiv lost its contract with its principal customer, representing around 70% of its turnover, in August 2015. Draft accounts for 31 May 2015 set out net assets of £415,668 but, after removal of a bad or doubtful debt of £705,196 owed by an insolvent associated company, it had net liabilities of £289,528.

Only two payments totalling £40,156 were ever made in respect of liabilities owed to HMRC in respect of PAYE/NIC for 2015/16 of £332,821.

These were insufficient to even repay the April 2015 return period of £43,361, due for payment in full by 22 May 2015.

There were no payments after 10 July 2015, despite a ‘time to pay’ agreement in August 2015 which was then immediately defaulted upon.

From 1 September 2015, Reactiv Media incurred further PAYE/NIC liabilities to HMRC of at least £155,701.

In comparison, in the same period, Reactiv Media made net cash transactions to Abbott totalling at least £177,664, wrote off a loan owed by an company associated with him of £14,670, and transferred both an investment in that company valued at £75,000 and a further debt it owed of £93,550 to associated third parties.

David Brooks, group leader at the Insolvency Service, said: ‘There are three distinct allegations underpinning this disqualification. As a whole, they show a director who flagrantly breached his duties to regulators and company creditors over an extended period.

‘Facts of this case, which were particularly disquieting, were the £252,071 of personal spending on deposits for two houses in the very month that the unjustified grant funds were given to the company, and the nature of some of the £177,664 of identified personal benefits taken from 1 September 2015: this included at least £55,000 spent on jewellery and Mr Abbott’s wedding.’

Report by Pat Sweet

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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