How to stop a rogue director

[rich888]

OK then, I was going to post the subject as 'How to stop a rogue company' then realised that if the company is liquidated by the director then it will no longer exist, so probably not the most relevant title to use.

So if a company is trading illegally for over a year and is proved to be trading illegally and taken to court and is fined for over £20,000, how is it possible for the sole director to be allowed to liquidate the company to avoid the fine whilst the workers who he pays continue to work without any interruption and continue to use the sign-written van to this day even though the company originally went into liquidation in December 2014 though have fluxed in and out of liquidation till late July till a new company was formed.

It now transpires that the company operating from the unit in an illegal manner wasn't the company paying the rent, this was another company owned by the same director, and once again, this company also went into liquidation to avoid paying rent and council tax dating back to last year.

It now seems that the workers driving the sign-written van are/were self-employed, though only seemed to work for one company as above, and the above company director details shown on company house seemed to change between him and his wife.

So what can be done to stop this abuse of the limited Company status?

Perhaps the responsibility for the rates should be the owner of the unit, who will in turn ask the landlord to pay the rates, who in turn will ask the unit holder to pay the rates, that way someone will become accountable no matter what fiddles are involved.

As regard to the 'self-employed' workers working for the company, they will each need public liability insurance. Am sure HMRC will take a dim view on this.

Surely if the company has gone into liquidation the insurance policy on the sign-written van will be void, as will the vehicle lease contract, so the drivers whether self-employed or otherwise will surely be driving around in an uninsured van. The police may be interested in this scenario.

They still have the website in operation so continue to trade on a daily basis, even though Companies House report them as in 'Liquidation', and their employees continue to drive road in the sign-written van of the company in liquidation, and use the same phone numbers as before, it's a great big scam, yet they seem to be untouchable by the authorities because they keep fluxing in and out of liquidation and changing company and director names.

The director and his wife seem to have no interest with complying with any rules or regulations imposed by the council or the courts, they just start up and liquidate ever more 'throwaway companies' as they see fit, and just carry on regardless.

So how can this type of rogue company director be stopped?

[TransverseTight]

This should explain a bit. https://www.gov.uk/company-director-disqualificati...

However what happens most of the time is they'll set up a business in the wife's name, brother's; name and anyone else they can convince with them just acting as "manager".

When those options run out there's always sole trader, LLP and a few others.

Best answer is a few blokes with baseball bats and a quiet word about social responsibility and karma.

[Red Devil]

TransverseTight said:

This should explain a bit. https://www.gov.uk/company-director-disqualificati...

That link doesn't work. Try this one - https://www.gov.uk/search?q=disqualified+directors
OP, have a look at this as well - http://www.future-law.co.uk/wp-content/uploads/201...

Phoenixing is a widespread problem. Unscrupulous types exploit it to the full.
Unless the amount of money is substantial action tends to be sporadic at best.
Follow the links to Table D1 in the government archive starting here.
https://www.gov.uk/government/uploads/system/uploa...
You can see how few prosecutions there have been. The number who have spent time inside is fewer still.

[rich888]

Thanks for the links guys, will give them a read over.

Seems that UK legislation needs to be updated to stop this sort of behaviour which is becoming more widespread.

Certainly the option of a few heavies going round is one possibility, but we don't want this escalating into gang warfare if it can possibly be avoided.

I certainly think that if it's not already in place, the law needs to be changed so that the owner of the property is made ultimately responsible for the rates, that way, the buck stops at them and they can chase the dodgy tenants for the rent using whatever means necessary.

If they don't pay the rates then seize the building and sell it which should be a relatively simple process to achieve bearing in mind that Land Registry already know who owns what.

[mel]

rich888 said:

OK then, I was going to post the subject as 'How to stop a rogue company' then realised that if the company is liquidated by the director then it will no longer exist, so probably not the most relevant title to use.

So if a company is trading illegally for over a year and is proved to be trading illegally and taken to court and is fined for over £20,000, how is it possible for the sole director to be allowed to liquidate the company to avoid the fine whilst the workers who he pays continue to work without any interruption and continue to use the sign-written van to this day even though the company originally went into liquidation in December 2014 though have fluxed in and out of liquidation till late July till a new company was formed.

I'd guess the report will read along the lines that he was working with xyz "Business Recovery Specialists" during this time to try and trade out of the situation, however as of July it became apparent that the company was unable to meet it liabilities and as such the director has taken the decision to place it into liquidation

rich888 said:

It now transpires that the company operating from the unit in an illegal manner wasn't the company paying the rent, this was another company owned by the same director, and once again, this company also went into liquidation to avoid paying rent and council tax dating back to last year.

You haven't said what the "illegal manner" is but there's nothing wrong with one company holding the lease and then sub letting to another or passing on a management charge

rich888 said:

It now seems that the workers driving the sign-written van are/were self-employed, though only seemed to work for one company as above, and the above company director details shown on company house seemed to change between him and his wife.

how do you know who they worked for and if there's more than one company in this equation they could be working for either/or or both?

rich888 said:

So what can be done to stop this abuse of the limited Company status?

If you have anything specific that you believe is illegal then attend the creditors meeting and object, if not sorry, but suck it up.

rich888 said:

Perhaps the responsibility for the rates should be the owner of the unit, who will in turn ask the landlord to pay the rates, who in turn will ask the unit holder to pay the rates, that way someone will become accountable no matter what fiddles are involved.

Lost me, but it all depends on the lease wording and guarantors

rich888 said:

As regard to the 'self-employed' workers working for the company, they will each need public liability insurance. Am sure HMRC will take a dim view on this.

HMRC won't give a monkeys about PLI, it's nothing to do with them

rich888 said:

Surely if the company has gone into liquidation the insurance policy on the sign-written van will be void, as will the vehicle lease contract, so the drivers whether self-employed or otherwise will surely be driving around in an uninsured van. The police may be interested in this scenario.

No idea, MIB it and see but it's generally straightforward to move the lease over to a new entity, one phone call and sign a couple of forms. Lease company don't care what is written on the van until it goes back and then they want it clean.

rich888 said:

They still have the website in operation so continue to trade on a daily basis, even though Companies House report them as in 'Liquidation', and their employees continue to drive road in the sign-written van of the company in liquidation, and use the same phone numbers as before, it's a great big scam, yet they seem to be untouchable by the authorities because they keep fluxing in and out of liquidation and changing company and director names.

The liquidators are legally obliged to get the best value they can for the creditors which will include selling the "goodwill" which could include url's, phone numbers, fax numbers, etc. If no one else wanted them (likely) then they probably bought all that back for £1

rich888 said:

The director and his wife seem to have no interest with complying with any rules or regulations imposed by the council or the courts, they just start up and liquidate ever more 'throwaway companies' as they see fit, and just carry on regardless.

It'll only go on so many time before it flags and they end up barred, or if they owe HMRC £1M+ and they start digging, if not it's just another one of hundreds of companies going that way every day

rich888 said:

So how can this type of rogue company director be stopped?

To you it's personal (understandable) to them it's just a way of doing business.

The lesson is next time look closer at who you are about to do business with before you do, as opposed to finding all this stuff out (which is public) after the event, and when it's too late

[mel]

Oh and only do "The Heavies" if you really are prepared to see it through, you don't know who you are dealing with and although it's easy to drop a few hundred quid and take the problem to the front door of their house you've got to be prepared for it to come back at you escalated. Do you have family, kids, dogs, cars? stuff you care about? "sending round heavies with baseball bats" is never a fire and forget solution. Words-Fists-Sticks-Knives-Guns-Bigger Guns-Thermonuclear War it's called escalation and you should never start anything unless you are prepared to be a bigger nastier bd than the other guy. Stop and think, you send round the heavies to lean on him, you then come home and find someone has dropped a poisoned steak over the fence, the dogs dead, and the kids are devastated, then what? Break his legs? So you do that and someone throws brake fluid all over you cars or ammonia in your wife's face. Move on, and write it off as a harsh lesson.

[Rude-boy]

mel said:

Oh and only do "The Heavies" if you really are prepared to see it through, you don't know who you are dealing with and although it's easy to drop a few hundred quid and take the problem to the front door of their house you've got to be prepared for it to come back at you escalated. Do you have family, kids, dogs, cars? stuff you care about? "sending round heavies with baseball bats" is never a fire and forget solution. Words-Fists-Sticks-Knives-Guns-Bigger Guns-Thermonuclear War it's called escalation and you should never start anything unless you are prepared to be a bigger nastier bd than the other guy. Stop and think, you send round the heavies to lean on him, you then come home and find someone has dropped a poisoned steak over the fence, the dogs dead, and the kids are devastated, then what? Break his legs? So you do that and someone throws brake fluid all over you cars or ammonia in your wife's face. Move on, and write it off as a harsh lesson.

Very wise words.

Unless your world is one that exists the wrong side of the law, and if it did you would not be making posts like the original on here, sending the boys round is not an option for it will likely only lead to a very bad place for all.

It's great in the head, the reality is a whole different story.

[elanfan]

Get a local reporter interested and hopefully they'll print a story which would hopefully seriously affect his business and reputation.

[rich888]

Rude-boy said:

mel said:

Oh and only do "The Heavies" if you really are prepared to see it through, you don't know who you are dealing with and although it's easy to drop a few hundred quid and take the problem to the front door of their house you've got to be prepared for it to come back at you escalated. Do you have family, kids, dogs, cars? stuff you care about? "sending round heavies with baseball bats" is never a fire and forget solution. Words-Fists-Sticks-Knives-Guns-Bigger Guns-Thermonuclear War it's called escalation and you should never start anything unless you are prepared to be a bigger nastier bd than the other guy. Stop and think, you send round the heavies to lean on him, you then come home and find someone has dropped a poisoned steak over the fence, the dogs dead, and the kids are devastated, then what? Break his legs? So you do that and someone throws brake fluid all over you cars or ammonia in your wife's face. Move on, and write it off as a harsh lesson.

Very wise words.

Unless your world is one that exists the wrong side of the law, and if it did you would not be making posts like the original on here, sending the boys round is not an option for it will likely only lead to a very bad place for all.

It's great in the head, the reality is a whole different story.

Thanks for your in-depth reply and cautionary warning about involving the heavies, though note I was only replying to that comment made by TransverseTight, and do appreciate just how ugly these things can get!

TransverseTight said:

Best answer is a few blokes with baseball bats and a quiet word about social responsibility and karma.

The law will chug along at its own pace and things will change eventually. As I've suggested above, it would be relatively easy to implement the rates responsibilities to the house or unit owner, who would in turn modify the lease agreement to the unit or house holder who was renting the property, so whatever contracts were drawn up, the responsibility to pay would be the owner. So no wriggling out of paying.

As you say, the over-worked staff at Companies House, or whoever is responsible for overseeing the behaviour of companies and directors may eventually act and strike off the directors and associated family or friends who are involved.

Seem to remember the last episode of BBC Watchdog mentioned the law being changed to deal with this increasing problem, though as always won't hold my breath for this to happen.

[flemke]

If the problem is that these guys are the typical, garden-variety piss-takers, there may be little that can be done, until the law is changed.

It will often happen, however, that such people cannot limit themselves to treating other people badly, and that in addition they will forget to pay VAT, forget to file tax returns, forget to file documents as required by the law, etc. They tend to be quite forgetful.

HMRC has its own investigators and prosecutors, and so does the Department for Business, Innovation and Skills. Both are actively involved in investigating company-related fraud.

If you have actual, substantive evidence that these people have engaged in company-related fraud (for example, if one of them was made bankrupt and then became a company director prematurely), and if the scale of their abuse or fraud was sufficient, either organisation may be interested.