Richard Fordham, director of London-based housing market consultancy Fordham Research Group Limited, has been disqualified from acting as a director for six and a half years for failing to pay taxes.
The 60-year old was banned from acting as a director of a limited company until September 2019. The disqualification follows an investigation by The Insolvency Service.
FRG provided consultancy services and carried out research into the housing market for clients including local and central government, and house builders and developers. The company went into liquidation on 15 February 2010 owing almost half a million pounds to creditors, the majority of which – £429,941 – was made up of taxes owed to HMRC.
The Insolvency Service investigation showed that FRG had unpaid taxes dating back from March 2009. The company paid just £44,945 towards this debt – a tenth of the total owed by the time it entered liquidation.
Just three months prior to the company’s collapse, Fordham caused FRG to convert his director loan account, which had a balance of £189,600, into director’s remuneration. The effect of this conversion was that the loan account was not treated as an asset at liquidation, therefore was not recoverable to pay FRG’s creditors.
The conversion also resulted in a substantial PAYE income tax and NIC liability, which the company did not pay. Furthermore, Fordham paid himself £22,800 from FRG’s bank account, despite FRG being substantially overdue in its taxes and failing to comply with arrangements it had made with HMRC over late payment. Thus he acted to benefit himself to the clear detriment of HMRC.
Fordham was previously a director of Fordham Research Limited (FRL), which went into liquidation on 19 December 2007 and sold its assets to FRG. FRL owed £601,635 to its creditors, with HMRC being the largest creditor with unpaid taxes totalling £347,671.
In total, the two companies racked up a debt of £777,612 in unpaid tax.
Mark Bruce, a chief examiner at The Insolvency Service, said: “By disqualifying directors who seek an unfair advantage over their competitors by not paying tax we are upholding commercial confidence and promoting the UK’s reputation as a great place to do business. They should not expect to get away with it.
“Mr Fordham displayed a cynical attitude to the payment of tax in both his companies. Over £750,000 has been lost to the taxpayer. Just think what a school or a hospital could have done with that money.
“Other directors tempted to follow this path should remember that if they run a business in a way that is detrimental to either its customers or its creditors they lose the protection afforded by limited liability. The Insolvency Service will investigate them and seek to remove them from the business environment.”