After being placed into Creditor’s Voluntary Liquidation in 2015, the director of the company was unable to deliver accounting records to the insolvency practitioner, which then led to an in-depth investigation.
Find out more about the case and the real cost of failing to maintain adequate accounting records regardless of the size of your business.
This report was first published by the Insolvency Service on the GOV.UK website and can be read in full here.
The Punishment For Failing To Maintain Adequate Accounting Records
In cases of serious misconduct such as this one, directors of the company will often be disqualified from running companies in the future. A person with this kind of disqualification cannot act as a company director, take part in the promotion, formation or management of a company or be a receiver of a company’s property.
“Maintaining and keeping adequate accounting records is a legal requirement for all companies. Failure to do so is serious misconduct, and the length of Mr Zaid Fares Al-Safee’s disqualification reflects this.”
Ken Beasley, Official Receiver for the Insolvency Service
The Real Cost Of Keeping Poor Accounting Records To Business
In addition to legal action, failure to keep accurate records can have other negative effects on the success of your business including:
- More challenging to monitor the financial performance of your business which can lead to poor decisions being made.
- Loss of income through missing out on various tax reliefs and claiming back expenditure.
- Harder to obtain investment from banks, complete mergers, acquisitions or sell the company.
- Incur fines from HMRC for taxes that are filed inaccurately
- Having an accountant rectify these accounts from scratch can be very costly and time consuming.
- Any accounting errors through bad record keeping can result in a tax inspection from HMRC. Take a look at our guide to preparing for a tax inspection for more advice on this.
Professional, Trusted Accountants Bristol
At First Call Financials, we work with a wide range of clients of all sizes across various industries, ensuring their accounts are accurate and up to date. If you’re concerned about the state of your accounts, or want to find out more about any of our services; give one of our friendly team a call today on 0117 3790810.
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This post was written by Steph Roffey