Suspended sentence for Wakefield director who tried reclaim more than £3 million in VAT.

A company director who failed to keep records told investigators he was not in control of his company after trying to reclaim £3.3m in VAT.

Friday, 9th July 2021, 4:28 pm

David Smalley, 29, from Wakefield, was director of Kenza Village Limited which was said to trade metals and electrical goods.

In July 2014, Smalley submitted a reclaim for VAT he said he had paid, totalling more than £3.3m.

However, the tax authorities found that no such amount had been paid, Leeds Crown Court heard.

Leeds Crown Court.
Leeds Crown Court.

The tax authorities subsequently wound up Kenza Village Limited in the High Court in December 2015 and the Official Receiver was appointed liquidator, sparking an investigation by the Insolvency Service.

It was found that Smalley had failed to ensure Kenza had maintained or preserved adequate accounting records during the entirety of his period as director of the company from February 2014 to December 2015.

When questioned, Smalley claimed that his role as director was so others could use him as a ‘front’ for the business, and that he was paid small amounts by others who were the controlling influence in the company without officially being linked to it. It is not thought Kenza Village Limited ever actually traded.

He was charged and pleaded guilty to one count of failing to keep adequate company records, contrary to Section 387 of the Companies Act 2006.

Smalley was sentenced to eight months' jail, suspended for 12 months, and also made subject of a three-month curfew.

He is also disqualified as a director for a further four years meaning he cannot, directly or indirectly, become involved, without the permission of the court, in the promotion, formation or management of a company.

Julie Barnes, chief investigator at the Insolvency Service, said: "David Smalley claimed that he was not the real director of Kenza and was instead being used to hide others who were the real controlling influences.

"The responsibility still lies with the company director and we will take action if the legal requirements placed on directors are not adhered to."