Gary Carcary of Glasgow-based plumbing and heating company, BAUR (Scotland) Ltd, has been disqualified as a director for five years.
He tampered with accounting transactions to make it appear he owed nothing to the company through his overdrawn directors loan account (ODLA). Over time, accounting records showed he reduced the balance he owed to zero, however this was not the case.
By the time the company ceased trading in 2014, The ODLA was in fact overdrawn by £273,747.
The Insolvency Service investigation found this also caused the company to owe £267,126 to HMRC. After Mr Carcary told his accountants he was not planning to repay the money and instead wanted it to be his remuneration from the company, they advised this would cause substantial PAYE and NIC liabilities. Reducing the balance of the ODLA caused a tax debt of £267,126 to HMRC.
The company could not continue to trade with this level of debt and therefore ceased trading and was put into compulsory liquidation in July 2014.
Robert Clarke from the Insolvency Service commented, “Directors who put their own personal financial interests above those of creditors damage confidence in doing business and are corrosive to the health of the local economy.”
“This ban should serve as a warning to other directors tempted to help themselves first; you have a duty to your creditors and if you neglect this duty you could be investigated by the Insolvency Service and removed from the business environment.”
If your company is struggling financially and you have an overdrawn directors loan account, call us on 08009700539 to discuss your options.