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July's round up of the latest tax investigation news and cases:
The former financial controller of Lucion Group, who had been with the company for 13 years, has been sentenced to three years in prison for embezzling over £350,000 from the multi-million pound company.
Claire Maxted began her career with the environmental services consultancy in 2008, eventually rising to the position of financial controller. Her fraudulent activities went unnoticed until 2023, following what is believed to have been a three-year period of theft from the company, which reported a turnover of £47 million for 2023.
Lucion Group CEO Phil Cole stated, “Lucion can confirm that C. Maxted was employed by the company for 13 years. In early 2023 it was identified by the team working in conjunction with our banking partners that suspicious activity was noted as outlined in the details of the individual’s court case.”
Maxted was sentenced at Guildford Crown Court on 22 July for fraud by abuse of position.
Cole further explained, “Prompt and thorough action by the company along with our banking partners identified the ‘fraudulent’ activity that has been outlined in C. Maxted’s court appearance. She was immediately suspended, investigations undertaken, and legal proceedings initiated, the culmination of which is the sentencing that was announced on Monday 22 July 2024."
"While disappointed that such activity was undertaken at all, we are pleased to see the result of the investigation and subsequent prosecution. Numerous changes have been made to our own governance processes, which included an independent review by a ‘big 4’ accountancy firm, the findings of which have been implemented to reinforce the robustness of our processes going forward.”
Maxted's fraudulent actions ultimately led to her receiving a three-year prison sentence.
A Romford builder has been banned from acting as a director for 11 years after faking his company's turnover to secure a £50,000 bounce back loan and withdrawing the entire amount in cash following a tax investigation by HMRC into his affairs..
Dumitru Scutara, 41, from Romford in Essex, is a Romanian builder and former director of Fixdumitru Limited, which was established in September 2018 and has since been dissolved. Following an investigation by the Insolvency Service, Scutara has been disqualified from holding a directorship.
Scutara provided false and misleading information to obtain the maximum covid loan, claiming that his company earned £250,000, which was over seven times its actual revenue of £36,644.40 in the 2019 financial year. Based on the real revenue, Fixdumitru Limited should have been entitled to only £8,661.
When the loan funds were transferred to the company’s bank account, it had a balance of just £65.18. Between May and September 2020, £50,850.24 was withdrawn in cash, with £3,817.54 transferred directly to Scutara's personal account. The total trade expenditure was merely £3,258.82.
Scutara provided evidence of £15,018 worth of business purchases to the Insolvency Service but could not account for the remaining £35,831.72, which was withdrawn in cash. Additionally, the funds were not used for the benefit of the company but were immediately transferred to his personal bank account.
The company failed to repay any of the bounce back loan from Lloyds Bank and various other loans, leaving it £57,922 in debt. Furthermore, the company went bust owing HMRC £3,523 in unpaid income tax and National Insurance, with no recoverable assets.
Capital Books was appointed as the liquidator on 1 January 2022, and the company was officially dissolved in July 2023.
The Insolvency Service's investigation led to Scutara's ban from acting as a director for 11 years, ensuring he cannot repeat his fraudulent activities.
The bosses of several family-run construction companies in Bristol have avoided jail after fraudulently securing numerous Covid loans by inflating turnover and using dormant companies.
James Leslie, 45, and his father, William Leslie, 74, both of Dundry, Bristol, received suspended sentences for their attempts to exploit the Covid bounce back loan scheme for personal gain.
James Leslie, a builder, exaggerated the income of his construction companies to obtain two bounce back loans totaling £100,000. He was sentenced to two years in prison, suspended for 18 months, at Bristol Crown Court for fraud by false representation.
William Leslie pleaded guilty to one count of fraud in June after applying for a second bounce back loan for Logan Housing Limited, where both he and his son were directors. He received a 16-month prison sentence, suspended for 12 months, at the same hearing.
James Leslie applied for a £50,000 loan for Dartmouth Homes Ltd, falsely claiming a 2019 turnover of £250,000 and stating the business was severely impacted by the pandemic, despite it being dormant for years. He admitted knowing he was committing fraud but claimed he was "desperate for the money."
The loan money was transferred to Logan Housing Limited and Northwick Homes Limited, where Leslie was also a director. A month later, in June 2020, he made another fraudulent application, claiming a £300,000 turnover for Bampton Developments Ltd, which was also not trading at the time. Analysis showed the actual turnover was just over £18,000 for 2019. Leslie admitted using these funds for Northwick Homes.
William Leslie violated scheme rules by applying for a £50,000 loan for Logan Housing in May 2020, just three days after a separate £50,000 loan application for the same company. He confessed that he was aware of and consented to the first application and acted dishonestly in making the second.
David Snasdell, chief investigator at the Insolvency Service, said, "James Leslie made numerous deliberate false representations to secure money he was not entitled to during a national emergency. His father William Leslie also knowingly made a fraudulent application under the bounce back loan scheme, which was introduced to support viable businesses through the pandemic. The Insolvency Service will not hesitate to prosecute these cases, and both the father and son now have criminal convictions as a consequence of their actions."
Confiscation proceedings under the Proceeds of Crime Act 2002 are now being pursued against both defendants.
Patrick John McKay, 59, from Lytham St Annes in Lancashire, has been banned from acting as a director for seven years following an investigation by the Insolvency Service. McKay, a director of Preston-based A1 Traffic Safety Ltd, failed to file accounts and could not account for £9.1 million in payments when the business went bust, owing HMRC over £1.5 million.
McKay failed to maintain and produce adequate books and accounting records while serving as a director of the traffic management business, which collapsed with debts totaling £3,465,544.01.
When the company went into liquidation in February 2021, the liquidator from CRG Insolvency Practitioners requested access to all accounting records. However, McKay was unable to produce any records, despite the company's financial accounts listing fixed assets worth £429,450 as of 31 March 2019. Additionally, McKay could not justify bank payments totaling £9,142,446 made between June 2020 and January 2021 in connection with A1 Traffic’s business.
The liquidator also discovered that the company owed HMRC £1,548,839.45. Furthermore, the company had an outstanding Covid bounce back loan. Another director at A1 Traffic claimed the maximum loan of £50,000 on 4 May 2020, which was immediately transferred to a random bank account instead of being used to support the business during the pandemic.
On 7 May 2020, when the bank disbursed the bounce back loan, the £50,000 was transferred to an associated company, resulting in an overdrawn balance of £1,343.
On 25 February 2021, A1 Traffic entered liquidation with liabilities of £3,553,152, including the £50,000 owed for the bounce back loan. The liquidator's ongoing investigations have so far involved over 700 hours of work, including dealing with multiple law firms related to various trade claims from suppliers owed more than £1.9 million. The liquidation is expected to remain open for another year, pending possible proceedings.
McKay's director ban came into effect on 6 June 2024 and will remain in force for seven years.
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