The importance of maintaining statutory registers and other records is often overlooked. However, under the Companies Act 2006 it is an offence not to maintain statutory books. The consequences can be detrimental as can be seen in the cases highlighted below.
Case 1: K2 Grill and Pizza Ltd (Company Reg no 09569826)
In a recent case, Zabargan Ahmad, sole director of K2 Grill and Pizza Limited, was disqualified from acting as a director of a company by the Deputy District Judge Walsh in the County Court of Walsall.
Mr Ahmad failed to maintain and file accounting records. He was unable to provide information to the liquidator attempting to wind up the company’s affairs and to the tax authorities. Investigators could not determine the director’s salary or the company’s assets and liabilities.
As a result, the tax authorities issued the company with a fine of around £69,000 for failing to notify them of its tax liabilities. Mr Ahmad was also disqualified from acting as a director until December 2026 and until then he cannot be involved, directly or indirectly, with the formation, promotion or management of a company without getting permission from the court first.
Case 2: Security Management Services Limited (Company Reg no 09485319)
Similar circumstances arose in this case. In the two year period between trading and liquidation of Security Management Services (“SMS”), Mr Garvey failed to ensure that the company maintained and/or preserved accounting records and failed to provide the liquidator with up to date statutory books and records.
As a result, it was not possible for investigators to verify Mr Garvey’s explanations that cash withdrawals totalling £627,550 were used in the ordinary course of business, or in fact used to pay self-employed contractors. Investigators were also unable to determine why SMS registered for VAT on 10th June 2015, but only charged VAT on its sales invoices 6 months later.
Mr Garvey was given a disqualified undertaking – the administrative equivalent of a disqualification order but does not involve court proceedings – and is unable to act as a director of any company until July 2026.
Reasons why it is important to keep company books and records
Failure to comply could be costly.
- You may face being disqualified as a director for many years and unable to form any new companies, subject to Court permission.
- If and when you come to sell your company, the buyers’ solicitor will ask to inspect the statutory books. Out of date or missing information in statutory books could cause problems and delays.
- If there ever is a dispute over shareholdings, the first place that would be looked at is the register of members to try and determine the correct position. It is also imperative that a up to date and correct record be kept of all share allotments and/or transfers.
How Blaser Mills Law can help?
If you would like peace of mind that your company’s registers are accurate and up to date, then we can carry out a review for you and advise you accordingly.
** For a limited time only, we are currently running a special offer where we review your company statutory books for free. If there are any gaps or discrepancies we would charge a fixed price to amend and bring the books up to date. However, if you choose to sign up to one of our annual Blaze CoSec packages, these changes would be carried out for free. **
Blaze CoSec is a comprehensive company secretarial service offered by Blaser Mills Law. If you would like to speak with a member of our experienced team surrounding any of the matters highlighted in this article, or for further information please contact Neelum Jadoon on 01494 411177 or e-mail naj@blasermills.co.uk.