Press release: Takeaway bosses disqualified after submitting false tax returns

Following collaboration between the Insolvency Service and HMRC, Genc Ali Demir (53) and his nephew Mehmet Demir (26) have been disqualified from acting as company directors for seven years each after they suppresed takings and sales that had been omitted from submitted VAT returns.

The disqualifications relate to Mehmet Ali and his uncle’s management of Camden Kebab Ltd, which traded as kebab takeaway ‘Real Taste’ from 44 Camden High Street, North West London.

The Companies House register listed Mehmet Ali as the only registered director of Camden Kebab Ltd but investigations showed that his uncle played a key role in running the business.

An in-depth HMRC investigation revealed that the company had failed to record all of its takings and had therefore under-declared the VAT due to HMRC. As a result, HMRC raised a VAT assessment of £71,474.

During May and June 2016, HMRC carried out further investigations which uncovered, among other things, that the company ran a cash-only business and that the books and records it ought to have kept were inadequate and/or unsatisfactory.

At liquidation on 21 April 2017, HMRC stated that the company owed in excess of £297,000 for arrears of VAT, Corporation Tax and penalties.

HMRC issued Personal Liability Orders against both Genc Ali Demir and Mehmet Demir as their investigations led them to conclude both individuals ran the business despite officially it only being Mehmet Demir. Further investigations by the Insolvency Service following the company’s liquidation, confirmed the findings by HMRC.

As a result, Genc Ali Demir and Mehmet Demir gave disqualification undertakings which were accepted by the Secretary of State for Business, Energy & Industrial Strategy, on 5 and 9 April, respectively.

The disqualifications mean that both Genc Ali Demir and Mehmet Demir cannot be directors of a company whether directly or indirectly, or be involved in the management of a company in any way for the duration of their disqualifications – from 26 April and 30 April respectively – unless they have permission from court.

Lawrence Zussman, Deputy Head of Investigations with the Insolvency Service, said:

These disqualifications send a clear message to other company directors that tax abuse of any kind, particularly when it comes to suppression of takings by directors, will not be tolerated.

Much of the public service is funded by the correct amount of taxes being paid. By not declaring and paying the correct amount of taxes, the public has been deprived from receiving the services it deserves from the public sector.

Further, whether you are a registered director or not if there is evidence that demonstrates you acted in the capacity of the management of a company the Insolvency Service will be proactive in taking action against you which could result in disqualification as is the case here.

Notes to editors

Genc Ali Demir and Mehmet Demir were directors of Camden Kebab Ltd (Company number 08427880) which was incorporated in March 2013 before entering into Creditors’ Voluntary Liquidation on 21 April 2017.

Genc Ali Demir is of London and his date of birth is April 1965. Mehmet Demir is also of London and his date of birth is April 1992.

Genc Ali Demir and Mehmet Demir have been disqualified for 7 years each from 26 April 2018 and 30 April 2018 respectively.

In giving his undertaking, Mehmet Demir did not dispute that he caused or allowed Camden Kebab Limited to suppress and conceal sales figures which resulted in the company under-declaring and underpaying VAT and Corporation Tax in that:

• In November 2015, HMRC VAT officers’ visited the premises and inspected the company’s VAT records. The company operated a cash-only business and the records were found to be inadequate and unsatisfactory.
• During May and June 2016, HMRC VAT officers’ carried out several test purchases and compared these to the company’s till rolls.
• HMRC VAT officer raised a protective assessment based on an estimated 30% of sales being declared. On 23 February 2017 a VAT assessment for £71,474 plus interest of £1,933.41 was raised covering the periods ending 31 December 2014 to 31 December 2016.
• Camden Kebab entered into Creditors’ Voluntary Liquidation on 21 April 2017.
• The outstanding liability to HMRC as at the date of liquidation was £297,588.90 based on HMRC’s final proof of debt in respect of VAT, Corporation Tax, and penalties.

In giving his undertaking, Genc Demir did not dispute that he caused or allowed Camden Kebab Limited (“the company”) to suppress and conceal sales figures which resulted in the company under-declaring and underpaying VAT and Corporation Tax in that:

• In November 2015, HMRC VAT officers’ visited the premises and inspected the company’s VAT records. The company operated a cash only business and the records were found to be inadequate and unsatisfactory.
• During May and June 2016, HMRC VAT officers’ carried out several test purchases and compared these to the company’s till rolls.
• HMRC VAT officer raised a protective assessment based on an estimated 30% of sales being declared. On 23 February 2017 a VAT assessment for £71,474 plus interest of £1,933.41 was raised covering the periods ending 31 December 2014 to 31 December 2016.
• Camden Kebab entered into Creditors’ Voluntary Liquidation on 21 April 2017.
• The outstanding liability to HMRC as at the date of liquidation was £297,588.90 based on HMRC’s final proof of debt in respect of VAT, Corporation Tax, and penalties.

A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:

• act as a director of a company
• take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
• be a receiver of a company’s property

Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.

Persons subject to a disqualification order are bound by a range of other restrictions.

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. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency 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, and how to complain about financial misconduct, is available.

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