Exactly two years since the first lockdown was announced, the eyes of the public were…
A payroll services boss has been banned for orchestrating a multi-million-pound tax avoidance scheme.
The case puts a spotlight on company owners and should serve as a reminder that they are subject to strict conditions over keeping records.
The High Court issued a disqualification order lasting 11 years to the sole director of Magnetic Push Ltd.
The company was purportedly operating as a payroll services company and entered voluntary liquidation within a year of being formed.
However, the liquidator found the director completely uncooperative when requesting the company’s statutory records.
This was reported to the Insolvency Service, which investigated and found that the company was acting as an umbrella company in part of a tax avoidance scheme.
He had declared a VAT liability of just £609 but the tax authorities claimed more than £4 million from Magnetic Push in the liquidation.
Failure to keep accounting records can lead to a £3,000 fine and/or disqualification from acting as a director, as this case indicates.
If you haven’t reviewed your record keeping in a while, now is a great opportunity to do so.
Key points for company and accounting records
You must keep:
- Records about the company itself
- Financial and accounting records
- HM Revenue & Customs (HMRC) may check your records to make sure you are paying the right amount of tax.
You must also keep details of:
- Directors, shareholders and company secretaries
- The results of any shareholder votes and resolutions
- Promises for the company to repay loans at a specific date
- Promises for payments if something goes wrong and it is the company’s fault
- Transactions when someone buys shares in the company
- Loans or mortgages secured against the company’s assets.
Limited companies have to keep a register of ‘people with significant control’ (PSC), which must include details of anyone who:
- Has more than 25 per cent shares or voting rights in your company
- Can appoint or remove a majority of directors
- Can influence or control your company or trust.
When it comes to accounting records you must be able to evidence:
- All money received and spent by the company, including grants and payments from Coronavirus support schemes
- Details of assets owned by the company
- Debts the company owes or is owed
- Stock the company owns at the end of the financial year
- The stocktaking you used to work out the stock figure
- All goods bought and sold
- Who you bought and sold them to and from (unless you run a retail business).