A businessman has been disqualified from being a director for failing to question a VAT fraud at his company, despite having a flawless track record in the role.

The case involved the Secretary of State for Business, Energy and Industrial Strategy and XE Solutions Ltd.

Three of the company’s directors were disqualified for between 11 and 14 years under the Company Directors Disqualification Act 1986 because they had caused or allowed their company to participate in missing trader intracommunity VAT fraud.

A fourth director who had been far less involved in day-to-day operations was also unfit to be a director, as he had abrogated his duty by failing to investigate when the company’s turnover had suddenly hugely increased, and had deferred to one of the other directors when he should not have done.

The court accepted his evidence was more credible than that of the others and accepted he had decided to delegate the operations of the
company to the other directors, but in doing so he had failed to fulfil his duty to protect the company’s interests.

He had not asked for details of one the other director’s previous convictions and had deferred to him in relation to the running of the company, dealings with HMRC and the instant litigation, even when he knew he was not being provided with the required information.

That was a serious dereliction of duty.

His failure to investigate when the company’s turnover had undergone a sudden and extraordinary uplift was a reprehensible abrogation of duty.

He was unfit to be a director and was disqualified for four years.

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