Leicester’s textiles factories have faced heavy scrutiny since the city became the first in the UK to face a second lockdown. One factor linked to the spread of coronavirus was a lack of social distancing measures in some of the hundreds of factories and workshops in Leicester’s garment district, where companies are also accused of failing to pay workers the minimum wage.
Directors of clothing manufacturers in Leicester have been struck off for a combined total of more than 400 years in cases costing HMRC millions, data shared with the Guardian reveals.
Details of disqualified directors in Leicester provided by the Insolvency Service show that more than 50 people with links to the city’s textiles industry are currently banned from running companies for between three and 14 years.
They represent about 40% of all disqualified directors linked to companies listed on Companies House as headquartered in Leicester, suggesting that clothing manufacturers are hugely overrepresented against the city’s business community as a whole. Just over 1,000 of the 38,393 active companies registered in Leicester are listed as manufacturers of textiles or wearing apparel, or about 2.5%.
The new disclosures suggest minimum-wage issues in Leicester go alongside a range of other problems in factories there, including employer tax violations and allegations of so-called “phoenixing” – when a company goes bust owing significant sums in tax, only to reopen under a different name soon afterwards.
The fast fashion firm Boohoo has also been heavily criticised over its oversight of its supply chain in Leicester. Last week the Guardian revealed that 18 Boohoo suppliers had failed to prove they paid workers the minimum wage, and industry sources said they were aware of similar audits on dozens more firms.
While a director may be struck off over tax issues, they are not barred from owning a company if others manage it. There are fears that in some cases, banned directors may continue to play an active role in running the new companies, simply installing a new director to sign documents and be the public face of the business. Several of the struck-off directors are now “persons of significant control” in companies created after their previous businesses went into liquidation.
When HMRC finds that a former director acts in breach of a disqualification order or undertaking, it may seek to make them personally liable for any tax debts accrued while disqualified. They may ultimately face criminal investigation and a prison sentence of up to two years.
The reasons for disqualifications were not available in all of the cases examined by the Guardian, but in 21 of the 28 files where the basis for disqualification was provided, it related to tax fraud, inadequate tax returns, inadequate accounting records or trading to the detriment of HMRC – an umbrella term for cases where other creditors, including directors, have been paid but the tax authority has not.
While a director may be struck off over tax issues, they are not barred from owning a company if others manage it. There are fears that in some cases, banned directors may continue to play an active role in running the new companies, simply installing a new director to sign documents and be the public face of the business. Several of the struck-off directors are now “persons of significant control” in companies created after their previous businesses went into liquidation. When HMRC finds that a former director acts in breach of a disqualification order or undertaking, it may seek to make them personally liable for any tax debts accrued while disqualified. They may ultimately face criminal investigation and a prison sentence of up to two years.
The reasons for disqualifications were not available in all of the cases examined by the Guardian, but in 21 of the 28 files where the basis for disqualification was provided, it related to tax fraud, inadequate tax returns, inadequate accounting records or trading to the detriment of HMRC – an umbrella term for cases where other creditors, including directors, have been paid but the tax authority has not.
https://www.theguardian.com/uk-news/2020/sep/03/dozens-of-disqualified-directors-linked-to-leicester-textiles-trade
Directors of clothing manufacturers in Leicester have been struck off for a combined total of more than 400 years in cases costing HMRC millions, data shared with the Guardian reveals.
Details of disqualified directors in Leicester provided by the Insolvency Service show that more than 50 people with links to the city’s textiles industry are currently banned from running companies for between three and 14 years.
They represent about 40% of all disqualified directors linked to companies listed on Companies House as headquartered in Leicester, suggesting that clothing manufacturers are hugely overrepresented against the city’s business community as a whole. Just over 1,000 of the 38,393 active companies registered in Leicester are listed as manufacturers of textiles or wearing apparel, or about 2.5%.
The new disclosures suggest minimum-wage issues in Leicester go alongside a range of other problems in factories there, including employer tax violations and allegations of so-called “phoenixing” – when a company goes bust owing significant sums in tax, only to reopen under a different name soon afterwards.
The fast fashion firm Boohoo has also been heavily criticised over its oversight of its supply chain in Leicester. Last week the Guardian revealed that 18 Boohoo suppliers had failed to prove they paid workers the minimum wage, and industry sources said they were aware of similar audits on dozens more firms.
While a director may be struck off over tax issues, they are not barred from owning a company if others manage it. There are fears that in some cases, banned directors may continue to play an active role in running the new companies, simply installing a new director to sign documents and be the public face of the business. Several of the struck-off directors are now “persons of significant control” in companies created after their previous businesses went into liquidation.
When HMRC finds that a former director acts in breach of a disqualification order or undertaking, it may seek to make them personally liable for any tax debts accrued while disqualified. They may ultimately face criminal investigation and a prison sentence of up to two years.
The reasons for disqualifications were not available in all of the cases examined by the Guardian, but in 21 of the 28 files where the basis for disqualification was provided, it related to tax fraud, inadequate tax returns, inadequate accounting records or trading to the detriment of HMRC – an umbrella term for cases where other creditors, including directors, have been paid but the tax authority has not.
While a director may be struck off over tax issues, they are not barred from owning a company if others manage it. There are fears that in some cases, banned directors may continue to play an active role in running the new companies, simply installing a new director to sign documents and be the public face of the business. Several of the struck-off directors are now “persons of significant control” in companies created after their previous businesses went into liquidation. When HMRC finds that a former director acts in breach of a disqualification order or undertaking, it may seek to make them personally liable for any tax debts accrued while disqualified. They may ultimately face criminal investigation and a prison sentence of up to two years.
The reasons for disqualifications were not available in all of the cases examined by the Guardian, but in 21 of the 28 files where the basis for disqualification was provided, it related to tax fraud, inadequate tax returns, inadequate accounting records or trading to the detriment of HMRC – an umbrella term for cases where other creditors, including directors, have been paid but the tax authority has not.
https://www.theguardian.com/uk-news/2020/sep/03/dozens-of-disqualified-directors-linked-to-leicester-textiles-trade
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