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Director of chain of restaurants disqualified for falsifying VAT returns (1 March 2016)

Date: 01/03/2016
Duncan Lewis, Crime Solicitors, Director of chain of restaurants disqualified for falsifying VAT returns

The director of a restaurant has been disqualified after filing false VAT returns – and for taking £47,280 from the company in the last month of trading, after being told not to.

Volnei Augusto Borgert, 50, from Chester – director of Brazilian restaurant chain Camboriu Restaurants Limited – caused Camboriu to file three inaccurate VAT returns in 2012 and 2013, resulting in £162,684 not being declared as due.

Camboriu Restaurants Limited was incorporated on 5 November 2010 and started trading in 2011 as a chain of Brazilian-themed restaurants, under the trading style Tropeiro – latterly trading in Aberdeen, Glasgow, Sheffield, Nottingham and Chester.

An investigation found that Mr Borgert had taken advice from an insolvency practitioner that the company was not solvent, but went ahead and withdrew £47,280 from the company.

Insolvency Service investigators found that, when already in arrears with HMRC, Mr Borgert had falsified three VAT returns and paid the lesser amount shown on those returns, thereby concealing from HMRC the full extent of the VAT debt.

The company’s own records showed that £162,684 was knowingly under-declared.

From 6 December 2013 – having been advised by HMRC on 27 November 2013 that a winding up petition would be issued, as well as by an Insolvency Practitioner on 3 December 2013 that the company should be placed into Administration and no creditor should get preferential treatment – Mr Borgert went ahead and withdrew the sum of £47,280 for his own benefit.

The company’s share capital was £1 – and the Administrators sold the underlying business to an unconnected party.

Mr Borgert was the only director of Camboriu throughout the period of its trading and Liquidation.

Camboriu entered Administration on 31 January 2014, with estimated assets of £116,783 and liabilities totalling £1,354,780.

The Secretary of State accepted an undertaking from Mr Borgert on 1 February 2016, not to act as a director of a limited company for seven years from 22 February 2016.

Chief Investigator at the Insolvency Service, Cheryl Lambert, said:

“This is a significant ban reflecting the seriousness with which the Insolvency Service considers the conduct of the director.

“In overseeing the submission of false data to HMRC, which hid the true position, Mr Borgert allowed the company to continue trading using that undeclared tax as a reservoir of working capital.

“Despite being made aware of the true position, he wilfully ignored instructions from professionals and extracted money to reduce his personal exposure to loss.

“Directors of companies experiencing financial difficulties have a duty to act in the best interests of creditors, not to mitigate their own position – or simply extract what money remains.

“Mr Bogert’s conduct of Camboriu’s affairs fell short of the standards of competence and integrity expected – to protect the integrity of the market, the Insolvency Service will use its powers to protect the business world when directors act in this way.”

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