WIREDGOV

An Insolvency Service investigation leads to 15 years disqualification for the director of mobile phone company

Mark Robert Cook, a director of Crouch Commodities Ltd, a mobile phone wholesaler based in Braintree, Essex has been disqualified by the High Court for 15 years for causing the company to participate in transactions which were connected with the fraudulent evasion of VAT.

The investigation found Mr Cook either knew or should have known about such connections. Between April and July 2006 Mr Cook caused Crouch Commodities Ltd to wrongfully claim the sum of £19,376,461 from HM Revenue and Customs (HMRC) for four input tax reclaims for VAT periods March to June 2006.

The disqualification regime exists to protect the public and Mr Cook’s disqualification from 31 August 2016 means he cannot promote, manage, or be a director of a limited company until 2031.

This disqualification follows investigation by the Public Interest Unit, a specialist team of the Insolvency Service, whose involvement commenced with the winding up of the company, for unpaid VAT owed to HMRC.

The investigation uncovered that Crouch Commodities Limited participated in ‘missing trader fraud’. This is commonly known as “Carousel” fraud, as large consignments of electrical or other small item size high value goods are invoiced rapidly and repeatedly around trading chains, speeded up by movement on paper , with actual movement of goods only taking place as they enter or exit the UK.

Such missing trader fraud indicators included, the rapid succession of same day trades without deliveries within the UK of goods sitting at a shared freight forwarder, the common use of the same offshore bank, and entering into payment arrangements involving third parties who were neither suppliers nor customers. All traders banked with the First Curacao International Bank which was shut down by the Netherlands Antilles authorities in September 2006 in order to prevent money laundering.

Commenting on this case Anthony Hannon, Official Receiver in the Public Interest Unit, part of the Insolvency Service, said:

Crouch Commodities Ltd was involved in trading and making wrongful reclaims in a fraudulent VAT scheme which had been costing the UK Exchequer significant amounts of money at the time the fraud was perpetrated.

This is not a victimless crime, the main impact being on honest tax payers and their families who as a result suffered the effects of funding shortages in healthcare, education and other front line services.

Regulatory changes, investigative action and legal proceedings have reduced the scale of this fraud from 2007 onwards.

The Insolvency Service will not hesitate to use its enforcement powers to investigate and disqualify directors whose companies defraud the public purse.

Notes to Editors

Crouch Commodities Ltd (CRO No.04593081) was incorporated on 18 November 2002.

The petition to wind up the company was presented by HM Revenue & Customs in respect of unpaid VAT. The winding up order was made on 10 March 214.

A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:

• act as a director of a company
• take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
• be a receiver of a company’s property

Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.

Persons subject to a disqualification order are bound by a range of other restrictions.

The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice.

Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available.