VAT dodging electrician banned for five years

The Insolvency Service has secured a five-year disqualification order against a construction director after a £100,000 VAT tax bill went unpaid.

Stuart Palethorpe, 33, from Nottingham was the sole director of electrical installation company On Form Electrical Ltd which traded from early 2015 until November 2018.

HMRC petitioned to wind-up the business in 2018 due to outstanding VAT arrears, and the Official Receiver was appointed as liquidator.

The subsequent investigation by the Insolvency Service found that for the last three years of trading, Palethorpe had failed to ensure that his business paid VAT returns.

At the point of liquidation in December 2018, On Form owed the public purse £102,417 in unpaid VAT.

But because Palethorpe failed to maintain adequate accounting records, it is possible the business owed an even higher amount. The lack of records also prevented the Official Receiver from determining whether money disbursed from the business’ bank accounts was used for legitimate business expenditure.

As a result, the High Court gave Palethorpe a five-year disqualification order, beginning on 30 November 2021.

The disqualification order prevents Palethorpe from directly or indirectly becoming involved in the promotion, formation or management of a company without the permission of the court.

Dave Elliot, chief investigator for the Insolvency Service said: “Directors must ensure their companies pay the correct taxes but enquiries proved that Mr Palethorpe failed to do so while he ran the company.

“The electrician’s ban should serve as a warning to directors that if you fail to fulfil your obligations and seek to gain an unfair advantage over competitors, by failing to properly account and pay for your tax, you could lose the protection of limited liability.”

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