Budget 2012
Our expert blow-by-blow guide and commentary running throughout the Chancellor’s 2012 Budget

There was a tempting carrot for larger businesses with the promise of a falling mainstream rate of corporate tax rate to 22% in April 2014 and a more immediate fall to 24% this April. This ties in with the Chancellor's desire to make the UK one of the lowest corporate tax jurisdictions ...

Francesca Lagerberg Head of Tax

21/03/2012 14:55

The Chancellor George Osborne used the 2012 Budget as an opportunity to restate the Coalition Government's ambition to eliminate the structural deficit by 2015/16 and to focus attention on reforming tax and on new policies to stimulate growth across the UK economy...

Stephen Gifford Chief Economist

21/03/2012 15:04

With the personal tax allowance increases being accelerated to go up over £1,000 to £9,205 from April 2013 and a falling away at the same time of the top rate of income tax from 50p to 45p, the major talking point is how much better off taxpayers' will feel...

Francesca Lagerberg Head of Tax

21/03/2012 15:00

There was a tempting carrot for larger businesses with the promise of a falling mainstream rate of corporate tax rate to 22% in April 2014 and a more immediate fall to 24% this April. This ties in with the Chancellor's desire to make the UK one of the lowest corporate tax jurisdictions ...

Francesca Lagerberg Head of Tax

21/03/2012 14:55

The Chancellor George Osborne used the 2012 Budget as an opportunity to restate the Coalition Government's ambition to eliminate the structural deficit by 2015/16 and to focus attention on reforming tax and on new policies to stimulate growth across the UK economy...

Stephen Gifford Chief Economist

21/03/2012 15:04

Budget 2012 summary

Key highlights:

Changes to the personal tax regime
Anti-avoidance measures
Corporation tax rate reduced and new reliefs announced for the creative sector
Clamp-down on SDLT avoidance
Simplification for small businesses

Figures at a glance:

2013/14 Personal Allowance
£9,205

2013/14 top income tax rate
45%

SDLT rate for homes >£2m
7%

The Chancellor delivers his 2012 Budget

The Chancellor delivers his Autumn Statement 2011

Changes to the personal tax regime

As rumoured in the build up to this year's Budget, the Chancellor has announced plans to accelerate the increase of the personal allowance towards the Coalition Governments goal of £10,000.

From April 2013, the personal allowance is to increase to £9,205, although the basic rate band has been squeezed to reduce the benefit to higher and additional rate taxpayers. Age related allowances (available to individuals over the age of 65) are set to be phased out and aligned with the standard allowance. This is part of a new Government pledge to move towards a simpler tax administration.

The Chancellor has also signalled the end of the much maligned 50% 'additional rate' of tax, confirming suggestions that it is not effective at raising revenue. The rate will reduce to 45% with effect from April 2013. This will also impact on the dividend additional rate which will reduce from 42.5% to 37.5% and the trust tax rate which will reduce to 45%.

Anti-avoidance measures

From 6 April 2013 a new limit on all uncapped income tax reliefs will be introduced for anyone seeking to claim over £50,000 of reliefs.

This restriction is intended to ensure higher earners cannot use income tax reliefs excessively and will mean that relief is restricted to the greater of £50,000 or 25% of the taxpayer's income. This will not extend to reliefs where caps already exist, such as Enterprise Investment Schemes, but could catch gift aid relief, although the Government has stated it will not be allowed to hit the charity directly.

The Government has announced that it will accept recommendations of the Aaronson report on the introduction of a General Anti Avoidance Rule (GAAR). A consultation on the introduction of a GAAR is expected in the summer, with a view to including it within the Finance Bill 2013.
Corporation tax rate reduced and new reliefs announced for the creative sector

The Chancellor has announced a further cut in corporation tax of one per cent, to take effect from 1 April 2012. This is in addition to the cuts in the headline rate previously announced. This will give the UK an extremely competitive headline rate.

The Chancellor said "From next month, Britain will have a corporation tax rate of just 24%. And we will continue with the two further cuts planned next year and the year after."

This will give the UK a corporation tax rate of 22% by 1 April 2014.

The bank levy will be increased to ensure that the corporation tax cuts do not benefit the banks. The Chancellor hinted towards a possible future alignment of the small companies rate and the main rate of corporation tax.

The Chancellor also announced that new corporation tax reliefs will be introduced from April 2013 for the video games, animation and high-end television industries. This will follow a consultation process and will be subject to State aid approval.
Clamp-down on SDLT avoidance

As expected, the Chancellor announced a clamp-down on stamp duty land tax (SDLT) avoidance. From 21 March 2012, a 15% rate of SDLT will apply to residential properties with a purchase price above £2 million, which are bought by 'non-natural persons', such as companies. In addition, the Government will consult on the introduction of an annual charge on residential properties valued above £2 million owned by non-natural persons.

From 22 March 2012, a new SDLT rate of seven per cent will apply to all residential properties purchased for more than £2 million.

Legislation has been published today to close the SDLT avoidance scheme involving 'sub-sales' relief by clarifying that the grant or assignment of an option cannot satisfy the requirements of the SDLT sub-sales rule. This legislation is effective from 21 March 2012. The sub-sale provisions are one of a number of relieving provisions in the SDLT legislation. The intention of the sub-sale provisions is to relieve certain types of transactions from the charge to SDLT, where otherwise there would potentially be a double-charge. The Government believed that these reliefs were being abused to avoid SDLT and the legislation issued today is designed to ensure the abuse will not continue.
Simplification for small businesses

The Chancellor announced a number of measures to simplify the taxation system for small businesses, in response to a report by the Office of Tax Simplification (OTS)

The OTS suggested a range of practical changes to the way HMRC and businesses interact, designed to raise awareness of the help that is available; improve communication between small businesses and HMRC; and give small businesses more certainty about their tax affairs.

The Chancellor announced a new cash basis for calculating tax for small unincorporated businesses from April 2013. The Government will consult on the details of the scheme including on extending eligibility to businesses with turnover up to the VAT registration threshold of £77,000 and to let them grow their turnover up to £150,000 per annum before they will need to adopt the normal accounting rules. The new regime will be voluntary, so businesses will be able to choose the most appropriate method for them.

The current tax system means that there can be substantial tax due on disincorporation, so the OTS proposed the introduction of a tax relief enabling companies to disincorporate without incurring a significant tax cost, which would reduce administrative burdens and facilitate business reorganisations, allowing businesses to trade in the form that makes the most commercial sense. The Government announced today that it will also consult on options for making it easier to move out of corporation tax.
© 2012 Grant Thornton UK LLP – All rights reserved

09/03/2012 13:42

Insolvency Service

Court winds up another Sunday Solutions tax umbrella company

Reed Umbrella Ltd, which serviced a discredited tax umbrella scheme for the self-employed, has been wound up in the High Court in the public interest following an investigation by Company Investigations, part of The Insolvency Service.

The Court heard that Reed Umbrella Ltd had provided legal and invoicing services to the ‘Sunday Solutions Scheme’, a tax umbrella scheme that was later closed down by the Service’s Court action (see Note 2).
The services provided by Reed Umbrella Ltd comprised the checking of contracts between consultants in the scheme and their employers. Each time a consultant changed employer or the terms of employment, such as a change of hourly rate, the contract was checked and a charge levied by the company.
Reed Umbrella initially traded as Simpson Cooper and Associates, then as Sunday Solutions UK Ltd, expanding its activities to include invoicing services to consultants already in the tax scheme and to newly recruited consultants.
In the year to 30 April 2010 the company collected and processed some £21.4 million of earnings by consultants. Many of the 1500 or so consultants who used the service did not have their tax liabilities paid and remain liable for their unpaid tax.
Company Investigations Supervisor Chris Mayhew, who welcomed the ruling, reminded anyone considering using an umbrella tax scheme to ensure they used a reputable company:
He said:
“Reed Umbrella originally provided document verification services to the Sunday Solutions Scheme and from around February 2009 it also provided invoicing services to participants in the scheme.
The company’s turnover in the year to 30 April 2008 was just over half a £million but with the expansion into providing invoicing services the company then handled over £21 million but no annual or management accounts were prepared after those for the year to 30 April 2008.
Reed Umbrella’s provision of services to Sunday Solutions were essential to the continuance of the unscrupulous scheme which eventually failed with substantial losses to its participants. As set out in the Court’s judgement, the action taken means that Reed Umbrella’s affairs and its involvement in the scheme are properly examined and wound up in an orderly way”.

Notes
1. Reed Umbrella Ltd was incorporated on 2 April 2007. The company was originally known as Simpson, Cooper and Associates Limited, changing its name to Sunday Solutions UK Ltd on 8 September 2008 and then to Reed Umbrella Ltd on 20 February 2009. The registered office of the company was at Close Business Centre, 2nd Floor, Thomas Court, Thomas, Bristol, BS1 6JG from 2 June 2008 to 3 April 2009 and thereafter at The Conifers, Hambrook Road, Bristol, Avon, BS16 1QG. The sole recorded director throughout was Robert Paddock. The secretary from 23 May 2007 to 18 April 2008 was Victoria Louise Kerly.
2. The Sunday Solutions scheme was originally promoted and operated by Sunday Solutions Limited and Bradbury & Co Limited, both of which were ordered into liquidation in the public interest on 15 December 2010 on grounds that they had displayed a level of commercial probity that fell markedly short of acceptable standards – see news release “Umbrella tax companies taken out of service” issued on 21 December 2010.
3. On 14 November 2011 a further related company Reed Morgan Limited, that also provided invoicing services to the participants in the Sunday Solutions scheme, was ordered into insolvent liquidation on the petition of the Commissioners for HM Revenue and Customs in respect of unpaid National Insurance Contributions of £11,969.82. The sole recorded director and secretary of the company is Corran Vale Limited, a company registered in the British Virgin Islands.
4. The petition to wind up Reed Umbrella Ltd was presented in the High Court on 26 January 2012 under the provisions of section 124A of the Insolvency Act 1986.
The grounds for winding up Reed Umbrella Ltd were:
§ conduct falling below acceptable standards of commercial probity,
§ failure to submit accounts
§ failure to submit annual returns and
§ abandonment.
In ordering the company into liquidation Ms Registrar Barber said:
“From the evidence presented by the Secretary of State, and which the company has filed no evidence in response or any indication that it contests the petition, it is clear that the company participated in the Sunday Solutions Scheme. The other participants in the Scheme, Sunday Solutions Limited and Bradbury & Co Limited were wound up in the public interest in December 2010. The Sunday Solutions Scheme was marketed as an umbrella scheme by which self-employed consultants were invited to delegate responsibility for invoicing and collection of fees to Sunday, whilst Bradbury was to provide accountancy and taxation services. In reality this did not occur and Sunday Solutions and Bradbury, as mentioned, were wound up in the public interest. The grounds were that the companies marketed and used partnerships over which the consultant clients – and intended partners – lacked any control; the marketing of the scheme was misleading; the companies levied excessive and arbitrary fees for their services and that the companies failed to meet the clients’ tax liabilities or prepare and file accounts and returns for clients. The role of Reed in the scheme during the period of its trading between 2007 and April 2010 included the provision of legal services including advising clients on the employment contracts prepared for them as part of the scheme and invoicing services to consultants participating in the scheme. Reed therefore was very heavily involved in the scheme as a whole. Against this backdrop and on the evidence before me, which is unopposed, I am satisfied that each of the four grounds are made out, firstly that Reed facilitated the scheme providing payroll, invoicing, accountancy and taxation services to the consultants for which it received payment. The scheme has already been held to be contrary to the public interest as lacking commercial probity and causing its members substantial loss. Secondly, that Reed has failed to file accounts due to 31 January 2010 and 31 January 2011. Thirdly, that Reed has failed to file annual returns due on 30 April 2010 and 30 April 2011. Fourthly that Reed has ceased trading and appears to have been abandoned. Steps therefore need to be taken for the winding up of Reed’s affairs in an orderly fashion and the investigation of any claims that the scheme’s members may have against it. I am therefore satisfied that Reed should be wound up and I do so order.”

© Crown Copyright 2010

02/03/2012 15:00

Insolvency Service

Lancashire company director disqualified for giving banned father director’s duties

Matthew Richard Sixsmith of Whittle le Woods in Lancashire has been disqualified from being a director for eight years by Bolton County Court following an investigation by the Company Investigations North team of The Insolvency Service.

The disqualification means Matthew Richard Sixsmith cannot manage, control or be a director of a company until 2020.
The court found that Matthew Richard Sixsmith, 31, had allowed his father Richard Sixsmith, from Bolton, to act in the management of Bridgewater House UK Limited (‘Bridgewater’), a mortgage brokering company, despite the father having already been disqualified for a period of five years on 8 April 2005 relating to his misconduct in The Mortgage Practice Ltd.
Furthermore, Mr M R Sixsmith allowed his father to act as a director of the company in all but name, despite having already given an undertaking to the Office of Fair Trading (OFT) that he would not allow his father to act while disqualified.
Although Matthew Richard Sixsmith did not attend the hearing and offered no evidence in his own defence, the court heard he had confirmed to OFT investigators in 2008 that he was aware of his father’s disqualification and the implications thereof.
Prior to his son’s disqualification, Richard Sixsmith had already signed a further undertaking to the Secretary of State for a period of 12 years in respect of his conduct in the management of Bridgewater. A person who acts while disqualified may be personally liable for the debts of the company.
Commenting on the case, Claire Entwistle, Director of Company Investigations North said:
“In this case the directors attempted to circumvent the disqualification by a client and brokerage referral system . Directorship is not defined solely by the names listed at Companies House, it is the actions in respect of the company that define who is acting as director.
“Where disqualified directors continue to manage the affairs of a company, they will find that the protection of limited liability is not given to them and they may be criminally prosecuted . Likewise The Insolvency Service will act robustly against those who allow disqualified directors to act .”

Notes
1. Bridgewater House UK Ltd was incorporated on 27 February 2003

2. Bridgewater House UK Ltd entered Liquidation on 8 September 2009 with a deficiency to creditors of £317,437.

3. Disqualification undertakings were introduced in April 2001. They are an administrative equivalent of a disqualification order but do not involve court proceedings. Without specific permission of a court, a person with a Company Director Disqualification, including undertakings, cannot:-

§ act as a director of a company,
§ take part, directly or indirectly, in the promotion, formation or management of a company,
§ be a liquidator or administrator of a company; or
§ be a receiver or manager of a company’s property.
4. Further information on director disqualifications and restrictions can be found at: http://www.insolvency.gov.uk/directordisqualificationandrestrictions/wha...

© Crown Copyright 2010

The much heralded new draft EU Regulation on data protection was published at the end of January. The draft Regulation brings in a raft of changes to the rules on data protection, strengthening individuals' rights and seeking to simplify international transfers and the regulatory regime. Some of the changes will have a major impact if implemented in their current form.
Key proposals include:

An expanded scope for the EU regime, with organisations located outside the EU but that direct marketing to individuals in the EU or who collect data about individuals in the EU being subject to the EU rules.

A requirement for consent to be 'explicit' in all cases.

Direct obligations placed on data processors to document processing activities and to implement appropriate security measure to protect personal data (currently such obligations are only placed on data processors through contractual obligations).

A requirement to notify regulators of data security breaches within 24 hours.

Increased sanctions of up to 2% of annual worldwide turnover.

Abolition of the requirement to notify data processing activities to the regulator.

A requirement for all public authorities and businesses with 250 or more employees or whose core business involves data processing to appoint a data protection officer with defined responsibilities.

A new 'right to be forgotten', which will enable individuals to require organisations to delete their personal data unless they have a reason to retain it as permitted under the Regulation.

A new data portability right, under which individuals will be entitled to obtain a copy of their data in a portable format in order to change service provider.

Formal recognition of binding corporate rules as an approved method of ensuring adequate protection for data transmitted outside the EEA and a more streamlined procedure for obtaining approval for binding corporate rules.
The Regulation will have immediate effect when it comes into force, which is currently expected to be towards the end of 2014. First the Regulation will need to be approved by the European Parliament and the European Council. Undoubtedly there will be a number of revisions before the Regulation is finalised, however, organisations would do well to keep informed of proposed changes so that when the Regulation does come into force they are ready to comply with the new rules.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at 7 March 2012. Specific advice
should be sought for specific cases.
TLT LLP is a limited liability partnership registered in England & Wales number OC 308658 whose registered office is at One Redcliff Street, Bristol BS1
6TP England.

06/03/2012 09:54

HM Revenue & Customs

Tutors and coaches have less than a month to pay the tax they owe

Tutors and coaches have nearly a month left to tell HM Revenue and Customs (HMRC) about tax that they owe and arrange to pay the tax, interest and any penalties due.

Under the terms of the Tax Catch Up Plan, launched in October 2011, tutors and coaches had until 6 January 2012 to come forward and tell HMRC of any irregularities in their tax affairs. Those who notified their intention to take part now have until 31 March to pay what they owe.
Marian Wilson, head of HMRC Campaigns, said:
“It is always better to come to us rather than wait for HMRC to come to you. People who tell us about the tax they owe using this opportunity will pay a lower penalty than if we find them later.
“Those who owe tax and have not come forward should do so now. We have started analysing the information we hold and will begin the process of contacting them from April. They may not receive the same terms as those who notified us by 6 January, but terms will still be better than when we catch up with them.”
HMRC has gathered information and intelligence for the campaign and from April 2012 will use this to identify tutors and coaches who should have come forward under the plan, but chose not to. Those HMRC catches up with will face the possibility of substantially higher penalties - up to 100 per cent of the tax owed - and even criminal investigation.
To make arrangements to disclose and pay, go online at http:/www.hmrc.gov.uk/ris/tcup/notify.htm or ring HMRC on 0845 601 8817.

Notes for editors

Tutors and coaches who have registered for the Tax Catch Up Plan have until 31 March to tell HMRC what they owe and pay any outstanding liabilities. Further details: http://www.hmrc.gov.uk/ris/tcup/
People who have not yet notified HMRC that they owe tax, but believe they need to make a disclosure, can do so voluntarily by calling 0845 601 8817.
More than £500m has been raised by HMRC from voluntary disclosures, and a further £105m from follow-up activity. Previous campaigns have targeted offshore investments, medical professionals, plumbers and VAT defaulters.
HMRC campaigns provide opportunities for people voluntarily to put their tax affairs in order. The campaigns identify a target group and gather information and intelligence that can be used to encourage and influence that group to come forward. Once a campaign closes, HMRC uses that data to follow up those who have not come forward with action that can include criminal investigations.

© Crown Copyright 2010

06/03/2012 12:30

Insolvency Service

Court appoints provisional liquidator for landbanking company

Manor Rose Limited has been ordered into provisional liquidation by the High Court, following a petition by the Secretary of State for Business, Innovation and Skills (BIS) to close down it and a related company.

The petitions to wind up Manor Rose Limited, a land banking company, and its connected company MR Investment Club Limited followed confidential enquiries carried out by Company Investigations, part of The Insolvency Service.
Manor Rose Limited www.manor-rose.co.uk marketed land and other investment opportunities to the public including the sale of shares in MR Investment Club Limited.
The court has appointed the Official Receiver to act as provisional liquidator of the companies on the application of the Secretary of State for Business, Innovation and Skills. The role of the Official Receiver is to protect the assets and financial records of the companies pending determination of the petitions.
The provisional liquidator also has the power to investigate the affairs of the companies insofar as it is necessary to protect their assets including any third party or trust monies or assets in the possession of or under the control of the companies.
As the matter is before the court no further information will be made available until the petitions are determined. The petitions are listed for hearing on 30 May 2012.

Notes
1. Manor Rose Limited was incorporated on 22 May 2009 in the name of Vintage Partners Limited. The company changed its name to its present one on 8 June 2009. The registered office of the company is at 38 Hertford Street, London, W1J 7SG. The recorded directors of the company have been Mr Paul Moore (from 1 October 2010), Mr Thomas William David Carr (from 9 October 2009 to 25 January 2011), Foster Reeve & Co Limited (from 22 May 2009 to 17 August 2009), Mr Peter Martin Loughran (from 22 May 2009 to 9 June 2009) and Mr Richard James Pearce (from 9 June 2009 to 9 October 2009). The company has no recorded secretary.
2. MR Investment Club Limited was incorporated on 22 August 2011. The registered office of the company is at Suite 3 c/o Incorporate Online Ltd, 4 Town Quay Wharf, Barking, Essex, IG11 7BZ. The sole recorded director of the company is Mr Paul Moore (from 22 August 2011). The company has no recorded secretary.
3. The petitions to wind up the companies were presented in the High Court on 27 February 2012 under the provisions of section 124A of the Insolvency Act 1986.
4. The Official Receiver was appointed as provisional liquidator of the companies on 28 February 2012.
5. Company Investigations, part of the Insolvency Service, carries out confidential enquiries on behalf of the Secretary of State for Business, Innovation & Skills (BIS).

© Crown Copyright 2010

The Olympic Games

Everyone is working together to make the Olympic and Paralympic Games a great success, but there are some real issues employers need to start thinking about now. Your employees will fall largely into two groups:

those who plan to take time off during the Games because they hope to be:
a spectator: 6.6 million tickets were up for grabs and many people have a good idea of what events they will be attending.
a volunteer: the selection process to choose the 'games makers' has begun and successful applicants should be informed from early 2012
those who have no plans to take time off during the Games but may either:
hope to watch some tv or internet coverage while at work or may wish to discuss some sort of temporary flexible working arrangement
get fed up with all the fuss and any perceived favouritism shown to those with sporting interests

As the countdown to the Games continues, Acas will be publishing new and updated guidance to help you:

manage attendance: it's time to start talking to your employees about their plans. You may keep your policy simple - maybe have a 'first come, first served' policy for booking leave - but it may help to draw up some guidelines
work flexibly: whether or not you currently have flexible working in your business, it may be something to consider, even as a short-term measure
deal with performance issues: there may be problems around staff watching lengthy coverage via their computers. Why not plan for popular sporting events in advance - perhaps giving staff access to a tv during agreed times?
understand the legal rights of volunteers and the responsibilities you have towards them and how volunteering can help your business. Volunteering can help develop your employees' skills but you obviously need to protect your business interests. Many volunteers will be agreeing to ten days work, with three days training prior to the Games. You may decide to match an employee's leave with special leave.

Q&A on Volunteering
Employer
Q Three of my staff have got volunteer positions at the Olympics. I can only let one go. What's the best way of handling this?

A The key to avoiding potential misunderstanding or conflict is to have a clear policy in advance and communicate this to all staff - that way, everyone knows where they stand and you look after your business needs. Your policy need not be very complicated - a simple process of 'first come, first served' may be enough.
Q I have a member of staff who has got a volunteer place at the Olympics. Do they need to use their own holiday?

A Employees have no legal right to take time off for volunteering. You can decide to give paid or unpaid time off or, if not, the employee may wish to take annual leave. Many employers encourage their employees to volunteer to help develop their skills and give employees an agreed quota of paid days leave per year to volunteer - typically, about two days a year.
Q I have a member of staff who has got a volunteer place at the Olympics. Am I expected to pay for them while they volunteer?

A There is no legal right to be paid for volunteering. Volunteering is something employees often do because of their own interest, but increasingly employers are recognising the business benefits of volunteering - in terms of developing skills and supporting the local community. If your employee is taking special leave then it would be up to you to decide whether that will be paid or unpaid.
Employee
Q I've got a volunteer place at the Olympics but my boss won't let me have the time off.

A. There is no legal right to time off to volunteer. Your employer will need to look at their business needs when allocating time off. Check with your line manager if the company has a policy on volunteering. You may be able to reach a compromise - in terms of taking annual leave or unpaid leave for some of the days.
Q I've got a volunteer place at the Olympics but I don't quite have enough holidays left to take. Is there anything I can do?

A Discuss this with your employer, they may have a policy for employees wishing to volunteer as many businesses now actively encourage employees to get involved in community or charitable projects. Your employer may allow you time off, either unpaid or paid, or even match your annual leave with special leave.
Q Will I get paid if I volunteer at the Olympics?

A There is no legal right to be paid for time off from your employer for volunteering, however your employer may allow you special leave with or without pay, or you may wish to take paid annual leave.

Read about what Acas has been doing behind the scenes to help the Games run smoothly.
Training course - Managing the impact of the London 2012 games on the workplace

Acas has designed a training course for employers that gives guidance on the issues they may need to think through arising from the London 2012 Games such as planning staff holidays, working from home, and coping with difficult journeys to work. Details of the course can be found on our training page.

27/01/2012 15:13

Insolvency Service

Bankrupt jailed for six months for asset disposal

Mohammed Modhu, a bankrupt, has been sentenced to six months in prison by Luton Crown Court for removing £23,000 from his estate while undergoing bankruptcy proceedings, and failing to account for the same.

The case follows an investigation by The Insolvency Service and a criminal investigation and prosecution by the Department for Business Innovation and Skills (BIS).

Mr Modhu pleaded guilty to removing £23,000 from his account, which was part of the proceeds from the sale of a property to his brother, and for failing to account for the same. He was sentenced to six months' imprisonment for the removal and three months' imprisonment for the failure to account, to run concurrently. He was also ordered to pay £1,000 towards the costs of the prosecution.

Deputy Chief Investigations Officer Ian West from BIS said:

"This case is a clear indication of how seriously the courts take the actions of those who try to defraud their creditors and should be a warning to others."

Ins12/Coms/006

Notes
1. Mr Modhu of Luton was made bankrupt on 02 December 2008 upon the petition of Luton Borough Council for £7,140.65 for unpaid council tax.

2. As a bankrupt Mr Gordon was required by section 291 of the Insolvency Act 1986 to give the official receiver such inventory of his estate and such other information, and to attend on the official receiver at such times as the Official Receiver may reasonably require. This includes a duty to explain to the Official Receiver how pre-bankruptcy losses were incurred. It is a criminal offence to fail to provide a satisfactory explanation for losses to the Official Receiver. It is also an offence to remove property from your estate between the bankruptcy petition and the bankruptcy order, subject to the defence of having no intention to defraud or conceal

3. In sentencing Mr Modhu the judge, HHJ Kay QC, commented that Mr Modhu was someone who recognised the need to pay off debts owed, but preferred to pay friends rather than the council, showing a complete indifference to the bankruptcy petition.

4. The judge said that Mr Modhu had engaged in a persistent course of conduct that was thoroughly dishonest. He rejected the suggestion that the defendant's gambling addiction was such that he didn't recognise the need to pay off his debts, rather, the defendant had chosen not to pay, hidden his money, and lied for a long period about what he had done. He also said that the defendant's behaviour struck at the heart of bankruptcy proceedings.

© Crown Copyright 2010

Increase to Tribunal awards effective from 1 February 2012

An increased limit on Employment Tribunal awards for unfair dismissal came into force with effect from 1 February 2012.

The maximum compensatory award of unfair dismissal has risen from £68,400 to £72,300.

The maximum amount of a week's pay (used when calculating statutory redundancy pay (amongst other things)) has risen from £400 to £430.

10/02/2012 11:05

Insolvency Service

Manchester company wound up following Government investigation

A Manchester-based company claiming to sell franchise opportunities has been wound up in the public interest by the High Court following an investigation by Company Investigations of the Insolvency Service.

Advanced Media Information Limited (AMI) offered businesses and individuals an opportunity to sell advertising space on touch-screen kiosks in hotel foyers, enabling guests to access information on local amenities such as restaurants and bars.
The investigation found that AMI generated a turnover of more than £1.6m, of which £875,000 was paid to the current director, a former director and a senior sales person. Investigators found that the company failed to maintain, preserve or deliver adequate accounting records to explain these payments. In addition, the director did not cooperate fully with the investigators.
Businesses and private individuals who bought the advertising franchise paid between £10,000 and £20,000 in return for the right to sell advertising space on three company-owned kiosks, or a licence fee of £10,000 for outright ownership of a kiosk. AMI also received a commission on the advertisements sold.
AMI marketed itself on its own website, on other websites offering franchise opportunities and through a self-produced brochure "The Virtual Concierge", claiming that a single kiosk with 60 advertisers could generate an income of around £44,500 per annum.

Investigators found that nobody achieved that figure, that some franchisees earned nothing at all from their investment and that others had not even been provided with a kiosk many months after paying their fee. The investigators also found that franchisees were dissatisfied with the level of training and support received from AMI and that the company had terminated franchise agreements unreasonably.
Commenting on the case, Investigation Supervisor Scott Crighton said:
"AMI promoted itself as something it was not, selling franchises which did not deliver the advertised returns.
The Insolvency Service will pursue such companies and take steps to close them down."

Notes
1. Advanced Media Information Limited was incorporated on 25 January 2007 and had its registered offices at Hampton House, Oldham Road, Middleton, Lancashire, M24 1GT.
2. The petition was presented on 25 November 2011 under s124A of the Insolvency Act 1986 and the company was wound up by the court on 06 February 2012.
3. Company Investigations, part of the Insolvency Service, carries out confidential enquiries on behalf of the Secretary of State for Business, Innovation & Skills (BIS).
4. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from www.bis.gov.uk/insolvency

© Crown Copyright 2010