HM Revenue and Customs are launching an increasing number of disqualification proceedings against directors of insolvent companies. Over the past year, HMRC have launched such action against 813 company directors for failing to pay their company’s taxes. In comparison the previous year only 654 company directors faced the same disqualification action.
Philip White, Syscap chief executive obtained these figures. The financing company commented: “This is a huge increase in court proceedings against directors.” He also stated his belief that these figures would act as a “wake-up call” for any existing directors of companies who are currently facing cash flow problems. White said that they should pay heed to these figures as proof that HMRC will not be sympathetic in the face of the fragile UK economy.
Disqualification action taken against company directors prevents those individuals from becoming directors of other companies or being involved in their management, formation of promotion for a period of between one and fifteen years. They also incur unlimited liability for the losses of the companies they have been involved in. They could then face criminal charges accordingly.
White continued: “It’s all the more shocking because the number of company insolvencies has declined sharply over the last year. [But] continuing to trade while neglecting to pay HMRC is a risky strategy that could backfire if the company subsequently becomes insolvent.”