Following our blog last year detailing avoiding Directors Disqualification, there has been a recent update from the Insolvency Service.
Here are some hard-hitting facts and figures:
- Since April 2014, the average length of disqualification is 7 years. Directors can, however, receive more substantial bans.
- During 2018/19, 70 people received Section 6 disqualifications – bans for unfit conduct in relation to an insolvent company – these are between 11 and 15 years.
- 77% of substantial disqualifications were undertakings and the majority were for 11 (39%) and 12 (33%) year bans. But incredibly, even in this day and age with the advice available, 6 people did receive the maximum 15-year term.
- 43% of the substantial disqualifications in 2018/19 involved some form of tax misconduct, such as VAT fraud. Additional reasons were dubious investment schemes and directors breaching a previous ban.
- Industries were varied, including construction, retail, food and drink, real estate and technology.
- Of those individuals with substantial bans in 2018/19, a significant proportion were in their 40s (36%) or 50s (30%) but in 2018/19, we did see 2 people under the age of 30 and another 2 people over the age of 70 receive a lengthy disqualification. Age doesn’t matter in the law.
- London was the biggest hotspot, seeing 19% of substantial bans, followed by the West Midlands in second place having a 10% share. 3 disqualified directors were even registered to countries outside of the United Kingdom.
Don’t forget that legally, the directors of a company are required to act in the best interests of its creditors. Failure to do so could result in accusations of Wrongful Trading, Fraudulent Trading or Misfeasance leading to a Disqualification as a Director following an Insolvency procedure.
If you have any worries about the financial affairs of your company it’s important to take advice from your accountant or a Licensed Insolvency Practitioner. You can’t be criticised for taking expert advice but you certainly could if you don’t. At Poppleton & Appleby we don’t charge for an initial consultation, so don’t delay getting in touch for some expert advice.