Machinery firm director banned for false VAT returns

Mr Smith, 61, has been banned from being a director for 11 years, after more than £1.5 million was undeclared to HMRC from 2019-2022.

The ban prevents him from being involved in the promotion, formation or management of a company, without the permission of the court.

It follows investigations by the Insolvency Service.

Balgownie Limited went into administration in March 2024, with 24 people losing their jobs and creditors owed more than £3 million.

However, 15 jobs were saved when the business and its assets were bought out of administration by another company the following month.

Well below standards

Mr Smith, of Kirkton of Bourtie, Inverurie, Aberdeenshire, was the director of FB Realisations Limited, which was known for decades as Balgownie Limited.

For more than three years, he submitted false VAT returns on behalf of the company in his role as finance director, without the knowledge of his fellow directors.

Mike Smith, chief investigator at the Insolvency Service, said: “David Smith’s conduct falls well below the standards we expect of company directors.

“Smith’s misconduct was hidden from his other directors and only came to light when a consultant queried finances at a board meeting and he admitted that he had been manipulating the accounts for several years.

“By deliberately suppressing VAT payments, Smith deprived the public purse of vital funds that should have gone towards essential public services such as schools and the NHS.”

Balgownie Limited was set up on Companies House in 1973 but had a trading history dating back to 1907.

READ MORE: What does the new CenTax report say about IHT reforms?

The undeclared VAT totalling £1,575,584 consisted of:

• Falsely claiming VAT refunds on expenses that were actually for private or personal use rather than legitimate business purposes in the quarter ending December 2018
• Deliberately understating the amount of tax due on sales made between March 2019 and March 2022, across multiple quarterly returns
• Falsely claiming refunds by backdating purchases to earlier tax periods without having valid invoices or evidence to support these claims.

Smith signed a disclosure with HMRC in March 2023 where he admitted deliberately under-declaring the amount of VAT his company should have paid.

The secretary of state for business and trade accepted a disqualification undertaking from Mr Smith, and his ban started on Monday 21st July.

He was declared bankrupt in August 2024 following a petition from one of the company’s creditors.

Read more business news.