HMRC is pursuing demolition firm Squibb Group for £16.5m after its fraud unit found that company directors had made improper payments over 12 years, including using funds for personal expenses.
Yesterday, the High Court granted a winding-up order against the company, bringing in the official court to manage its closure.
Squibb Group had applied to go into administration, but HMRC successfully argued for a liquidation, so that its fraud allegations could be fully investigated. Squibb Group denies all allegations made against it.
Court documents filed by HMRC said: “If the company goes into liquidation, the liquidator may investigate allegations made by HMRC about the misuse of company funds by the company’s directors and former directors for the purpose of initiating proceedings to recover any sum unduly drawn or spent”.
The documents say that in June HMRC levied £16,561,375.31 on Squibb “for deliberate assessments and penalties” following an investigation by the tax body’s Fraud Investigation Service.
HMRC said assessments were raised in relation to:
- The withdrawal of cash from the company by a former director for personal reasons that has not been charged to that director’s loan account.
- The directors’ use of company funds for personal and private expenses, such as major expenses incurred on a swimming pool with slide at their home and a family holiday at the Gleneagles Hotel resulting in a bill of 31,771.50 £.
HMRC’s submission to the tribunal said it “did not accept that the payments alleged to have been made were made wholly and solely for commercial purposes”.
He added that there was insufficient evidence to support the claim that these payments were legitimate business expenses and that he considered some of the invoices provided to be false.
The body said the charges cover the period from June 30, 2003 to January 31, 2015 and include amounts related to corporation tax and VAT.
He presented the court with a list of the sums he believed the directors had wrongly taken/spent – a total of more than £4 million.
“Furthermore, further claims may be available relating to HMRC’s allegations that the company improperly claimed business expense deductions and understated its income,” he said.
According to HMRC, Squibb appealed its initial findings about the payments, but a review upheld them and increased the resulting assessment and penalty for the accounting period ending January 31, 2021.
HMRC’s court filing added that its fraud team “has reason to suspect based on the information held that the reported behavior has continued in more recent periods”.
In a statement to Construction newsSquibb Group managing director Les Squibb said the company was exercising its right to appeal to the First-tier Tribunal (Tax).
He said: “We completely refute all these allegations and believe the assessment to be baseless and incorrect.
“The first review was carried out by another HMRC department and is not independent. We appealed the same day we received the review as it does not make economic sense.
“The investigation has been ongoing for nine years and has caused a terrible strain on our family.”
HMRC is also separately seeking £1,654,771.63 in relation to PAYE, National Insurance, student loan repayments and Construction Industry Scheme payments which it claims Squibb Group has failed to make.
