On 15 October 2024, Vezubuhle Ndlovu (“Mr Ndlovu”) of Bury, director of VN Electrics Limited (“the Company”), was sentenced to 10 months in prison for failing to provide company records to the Insolvency Service after his company went into liquidation owing over £200,000 in unpaid tax.

The Company was liquidated in December 2019, following a petition from HM Revenue and Customs (HMRC), who were owed £221,600. Mr Ndlovu failed to deliver accounting records, preventing the Official Receiver from fully investigating the company’s finances.

Despite multiple requests from the Insolvency Service, Mr Ndlovu did not provide the required documents or attend interviews. Mr Ndlovu’s lack of cooperation meant the Insolvency Service could not verify whether reported sales and purchases of over £1 million, between August 2017 and February 2019, were accurate. The company’s assets, if any, also could not be traced.

Civil proceedings led to Mr Ndlovu being banned from serving as a director for seven years in April 2022, but his continued refusal to engage resulted in a criminal investigation, ultimately leading to his prison sentence.

When a company enters liquidation, under section 235 of the Insolvency Act 1986, officers and former officers of the Company (which includes directors) and other relevant persons, are required to give to the Official Receiver any information concerning the Company, its promotion, formation, business, dealings, affairs and property.

If the officer fails to co-operate, without reasonable excuse, then they could be compelled to attend court to be questioned under oath and be ordered to produce relevant documents. In the most severe cases an application for a warrant of the arrest of the officer can be made if they do not comply. The Official Receiver/ Liquidator will normally seek other means of enforcement, for example public examination, and consider an application for a warrant for arrest only after other action has proved unsuccessful.

If you are an officer and have concerns regarding your duties to co-operate with the Official Receiver, please contact our specialists at Farleys on 0845 287 0939 or contact us by email.