Accounting errors at heart of company’s liquidation

Blog Liquidation

A business has been placed into compulsory liquidation after the company director failed to disclose the full details of its trading activities and tax liabilities.

An Insolvency Service investigation found that Pioneer Traders (UK) Limited had not fulfilled its duties to maintain and preserve adequate trading records, and at costs assessment, owed more than £285,000 in VAT.

Company director Amandeep Singh Lalli was also banned from acting as a company director for 11 years as a result of his conduct.

The Official Receiver was unable to determine the “full nature” of the firm’s trading activities during the period of Mr Lalli’s appointment. Further, the Receiver was unable to establish whether much of the stock it held and traded was legitimate.

It said the company director caused the company to make “wrongful declarations” for VAT, as well as on goods and trading on which excise and VAT was due.

Tony Hannon, the Official Receiver in the Public Interest Unit South, part of the Insolvency Service, said: “Directors have a duty to ensure that their companies maintain proper accounting records, and, following insolvency, deliver them to the office-holder in the interests of fairness and transparency.

“Without such records, it is impossible to determine whether a director has discharged his duties properly, or is using a lack of documentation as a cloak for impropriety.”

Liquidation – what is it?

Also known as winding up, a company put into liquidation can no longer trade or employ people. If it owes money, the liquidator will use the company’s assets to pay debtors in order of priority.

Directors normally place their company into voluntary liquidation because it can’t pay its debts and/or they want to close it.

If your business debts are mounting up and spiralling out of control, it can be difficult to know how to cope or where to turn to get good company debt advice.  Gibson Hewitt has been providing professional expert business insolvency advice to businesses which are facing financial difficulties for over 25 years. Based in West Byfleet, near Woking in Surrey we offer a one-hour FREE consultation meeting, with no obligation. Contact us today.

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