County Down director agrees to disqualification
Date published:
The Department for the Economy (the Department) has accepted a disqualification undertaking from the director of a company involved in the retail sale of clothing in specialised stores.
The undertaking was received for seven years from David James Kerr (39) of Blackrock Crescent, Newtownards, in respect of his conduct as director of David James Kerr Ltd (“the Company”).
The Company was involved in the retail sale of clothing with a registered office at 2 Market Place, Carrickfergus, BT38 7AW. The Company went into liquidation on 8 March 2022 with an estimated deficiency as regards creditors of £1,276,915.51. There was a total of £10 owing as Share Capital, resulting in an estimated deficiency as regards members of £1,276,925.51.
The Department accepted the disqualification undertaking from David James Kerr on 16 September 2024 based on the following unfit conduct which solely for the purposes of the disqualification procedure was not disputed:
- Knowing or ought to have known that the Coronavirus Business Interruption Loan Scheme should have been used to refinance the Bounce Back Loan in full. He did not repay the full balance of the Bounce Back Loan as advised by IWOCA on the day that he signed the Coronavirus Business Interruption Loan agreement. As such, David James Kerr Ltd obtained the benefit of an additional £50,000 in respect of the Bounce Back Loan which the Company was not entitled as the Bounce Back Loan should have been repaid in full when the Company received the Coronavirus Business Interruption Loan;
- Causing and / or permitting the Company to submit inaccurate VAT returns totalling £400,337, resulting in a loss of monies properly due to the Crown from 2017/18. As he submitted inaccurate VAT returns, he failed to comply with his duties in terms of filing accurate VAT returns, which resulted in the large debt falling due to HMRC. He continued to run the Company without any regard to his obligations as a director in terms of compliance with the VAT regime. This resulted in the Company having more money than it ought to have had available to fund its continued trading; and
- Causing and / or permitting the Company to operate a policy of discrimination against the crown by retaining monies which were properly payable to the crown from 2019/20. It appears that he caused and permitted the Company to retain a total of £950,933.12, being £550,596.12 in relation to non-payment of PAYE / NIC and £400,337 in respect of under declared VAT. This represented 74% of the Company’s overall deficiency in respect of PAYE / NIC and VAT properly payable to the Crown. Furthermore, he operated a policy of discrimination in that payments were made to trade creditors at a time when the HMRC debt continued to increase.
The Department has accepted ten Disqualification Undertakings and the Court has made two Disqualification Orders in the financial year commencing 1 April 2024.
Notes to editors:
1. Insolvency Practitioners acting as voluntary liquidators, administrative receivers and administrators have a duty to report unfit conduct to the Insolvency Service within the Department for the Economy.
2. The aim of the Department is to bring disqualification proceedings against those directors of failed companies who have abused the privilege of limited liability status through negligence, incompetence or lack of commercial probity. The legislation contained in the Company Directors Disqualification (Northern Ireland) Order 2002 (“the 2002 Order”) is for the protection of the public and trading community but its operation should not inhibit genuine enterprise.
3. In cases where a person is subject to either a Disqualification Order made by the Court or a Disqualification Undertaking accepted by the Department, that person shall not be a director of a company, act as a receiver of a company's property or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company unless he has the leave of the High Court. A disqualified person cannot obtain permission to act as an Insolvency Practitioner.
4. Article 9 of the 2002 Order provides that where a director is found to be unfit he must be disqualified for a minimum period of two years, up to a maximum of fifteen years. The Courts have decided that the level of seriousness of unfit conduct can fall into three brackets with the top bracket of periods over ten years reserved for particularly serious cases, six to ten years reserved for cases which do not merit the top bracket and two to five years for cases where, although disqualification is mandatory, the case is less serious.
5. The 2002 Order also allows directors, with the agreement of the Department, to avoid the need for a court hearing by offering an acceptable Disqualification Undertaking. This has exactly the same legal effect as a Disqualification Order made by the court, and will usually include a schedule identifying the director’s unfit conduct. The consequences of breaching a Disqualification Undertaking are the same as those for breaching a Disqualification Order.
6. If anybody contravenes a Disqualification Order or breaches their Disqualification Undertaking they may be committing a criminal offence and could go to prison for up to two years or face a fine or both. Any person with information to suggest that a disqualified person has acted in contravention of this provision should contact The Insolvency Service’s Directors Disqualification Unit on 028 90 548582.
7. The period of disqualification commences at the end of 21 days beginning with the day the Disqualification Undertaking was accepted by the Department.
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