Michael Andrew Smith, formerly director of UK Coachways Ltd – which had its licence revoked in September 2018 as a result of the business going into liquidation – has been disqualified for 11 years after it emerged that his company had avoided payments of over £500,000 to HMRC.
The Insolvency Service ruled that Mr Smith had “caused or allowed UK Coachways to submit VAT returns to HMRC which included inaccurate information with the result that UK Coachways obtained VAT repayments between at least 12 October 2012 and 7 September 2015 totalling £321,413 that it wasn’t entitled to and had liabilities to HMRC at liquidation on 9 February 2018 of £512,538.”
According to the case details published on the Insolvency Service website, between 1 October 2012 and 31 August 2015, the company submitted inaccurate VAT returns which led to it receiving £444,235 in VAT repayments.
HMRC carried out an investigation in 2015 and determined that, instead of the £444,235 in VAT repayments it received, the company was only entitled to £122,821.
HMRC viewed this discrepancy as deliberate, and issued a penalty against the company of £134,973 and against Mr Smith personally of £30,206. The penalty against the company went unpaid following its liquidation.
In October 2015, he admitted to knowing about the submission of inaccurate VAT returns in a meeting with the HMRC. Between 1 September 2015 and liquidation Coachways made 23 monthly VAT returns for periods between September 2015 and July 2017 for VAT repayments of £186,157, but these repayments were inhibited by HMRC to allow the claims to be offset against the outstanding liability.
At liquidation UK Coachways had total liabilities of £747,046 of which £395,774 (VAT £201,230, surcharges £1,272, interest £34,866 and penalties £158,406) was due in respect of VAT for the period of January 2012 to August 2015, after the later monthly VAT claims had been offset.
Bank statements show that in the period 28 October 2014 to 7 September 2015, the date of the last HMRC repayment, UK Coachways received £144,544 in VAT repayments. In the same period bank statements show that of £537,290 paid out, £76,881 was paid to Mr Smith or members of his family and £68,850 was transferred to an unidentified source under references of ‘UK Coachways TFR’ and ‘UK Coachways Ltd TFR’.
In addition to the fraudulent VAT returns, between 18 January 2017 and 6 December 2017 Mr Smith ‘caused or allowed’ UK Coachways to submit passenger returns (PRs) to Greater Manchester Travelcards Ltd (GMTL) which included inaccurate information, resulting in UK Coachways benefiting from £54,042 in ticket revenue that it wasn’t entitled to.
Following the annual instruction of auditors, an investigation into UK Coachways commenced in September 2017. An email was sent to the company on 8 November 2017 confirming that inaccuracies had been identified in the PRs submitted to GMTL.
On 8 December 2017 an email was sent to Mr Smith stating that as the PRs submitted by Coachways could not be validated, no further payments would be made to the company under the joint venture agreement.
On 7 February 2018 another email was sent to Mr Smith confirming that GMTL may want to pursue the monies paid in PRs. UK Coachways then entered into liquidation on 9 February 2018.
The investigation into the PRs submitted by the company was concluded on 29 July 2018. It was determined that it had received overpayments totalling £54,042 that it was not entitled to as a result of the inaccurate PRs submitted.