Vale & West Chartered Accountants Blog

Audit of insolvent company uncovers £40,000 in concealed assets

A travel operator has been shut down after attempting to hide £40,000 in company assets.

The assets, including three coaches, were discovered following a financial investigation by the Insolvency Service.

The director of the company has also been banned from running further companies for a period of nine years for failing to make full and proper accounts available to external auditors.

According to the investigative report, the company, HL Tours Limited, entered into Creditors Voluntary Liquidation (CVL) in October 2017 owing creditors £38,000.

Owing to the circumstances surrounding the company’s insolvency and the value of the funds at stake, an investigation was scheduled to be carried out by an insolvency practitioner.

However, it was noted that the practitioner had “faced obstacles throughout” and ran into difficulties gathering the necessary financial information required to liquidate the company.

It was later discovered upon further investigation that the director had, in fact, removed three coaches from the company and attempted to conceal the assets from auditors.

Although they were found a year later, the coaches had reportedly “deteriorated” in condition and lost value, ultimately to the detriment of the company’s creditors.

Likewise, no evidence was found to support the movement of almost £133,000 of bank transfers, including £127,000 to an account held by the director himself.

At a hearing, the director was accused of failing to ensure that the company “maintained or preserved adequate accounting records and failed to deliver them to the liquidator, which would have explained the position regarding the company’s assets and several financial transactions”.

Commenting on the case, Lawrence Zussman, Deputy Head of Investigations for the Insolvency Service, said: “The director thought he could hide assets from the liquidator, three coaches no less, to avoid paying his creditors even in the face of legal action. Thankfully, the coaches were recovered and sold on.

“Directors have responsibilities to their creditors and a nine-year disqualification demonstrates the consequences of those who put their interests above anyone else.”

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