Three men who ran a lettings agency and property management company in East London have been banned from acting as directors for a total of 13.5 years.
Khushal Khagram, Andrew Matin, and Alan Clark were directors of Harrison Property Partners, based in Tower Hamlets. The company, which was established in 2012, entered into creditors’ voluntary liquidation in February 2018 and there was subsequently an investigation by the Insolvency Service.
Harrison Directors Guilty of Repeated Misconduct
The directors had failed to submit their tax returns, which totaled some £500,000 and it was also noted they had not maintained sufficient accounting records.
Alan Clark, 39, of Benfleet, Essex, was banned for three years and five months – it was uncovered he had failed to submit tax returns when he was a director of the business from September 2013 until he resigned in July 2016.
Tax returns submitted after Clark had left Harrison Property Partners showed that close to £191,000 was owed to the tax authorities following his misconduct.
Andrew Matin, 34, from Thames Ditton, Surrey was removed from the Companies House register for six years in August 2021 after investigators found he had failed to ensure the company maintained sufficient accounting records and he did not deliver these to the liquidator.
Reasons for Company Failure Were Obscured
Matin’s misconduct meant it was not possible to verify many of Harrison Property Partners’ activities. This included whether more than £770,000 spent was on legitimate business expenditure or to confirm the nature of 50 payments to three accounts totaling £187,600. Further, it was impossible to determine the level of remuneration taken by Matin or the exact reasons for the company’s insolvency.
Matin also failed to ensure the property company submitted tax returns between October 2016 and February 2018. Since the property company went into liquidation, HMRC was owed more than £309,000 in tax liabilities.
Accountant Khushal Khagram, 52, of Finchley, North London, was banned for four years.
Directors Disregarded Their Responsibilities
It was found he had committed misconduct similar to both Clark and Matin in that he failed to ensure the company submitted tax returns between October 2016 and February 2018 and had traded to the detriment of the tax authorities. As is the case with Matin, the tax liabilities owed by the company further increased under Khagram’s directorship, following Clark’s departure.
Lawrence Zussman, deputy director of Insolvent Investigations, for the Insolvency Service said: “All three property bosses totally disregarded their responsibilities as company directors. The absence of proper company records means we cannot verify legitimate business activities and the failure to submit tax returns means they also abused the taxpayer in the process. Thirteen and a half years is a considerable amount of time to be removed from the corporate arena and will protect creditors and the taxpayer from any further harm caused by Khushal Khagram, Andrew Matin, and Alan Clark.”
New law to Close Dissolved Companies Loophole
Simon Renshaw, director with Company Debt, comments: “There have been some lengthy director disqualifications in recent months and across various sectors. There could be more resulting from some of the energy company failures and more broadly, resulting from Bounce Back Loan fraud.
“I’m also mindful that the Rating (Coronavirus) and Director Disqualification (Dissolved Companies) may come into law next year as it is progressing through Parliament. This is set to update existing law and will allow the secretary of state to investigate the conduct of former directors of dissolved companies. This should prove a wake-up call to any former director who dissolved, rather than liquidated, their businesses and thought they had got away with it. If it is found that the director’s conduct has led to creditors suffering a loss, then they will be permitted to seek compensation. This has existed as a loophole and closing it will put an end to the current time-consuming requirement to have a dissolved company restored to the Companies House register so that former directors can be investigated. The impact of this could well be significant and some former directors should indeed be feeling uneasy.”