Missing Trader Fraud – Company Director Receives 12-Year Disqualification


The law is relentless in its pursuit of directors who know, or ought to know, that their companies are being used as vehicles for VAT fraud. The former boss of a defunct mobile phones trading company found that out to his cost when the High Court disqualified him from acting as a company director for 12 years.

HM Revenue and Customs’ (HMRC’s) suspicions were raised after the company, which had no assets or investors and traded from its sole director’s residential address, entered into three deals worth more than £10 million in a single VAT period. A VAT reclaim in excess of £1.7 million in respect of the transactions was rejected on the basis that they were connected with missing trader intra-community (MTIC) fraud.

After the company’s subsequent appeal to the First-tier Tribunal was dismissed, an immediate misdeclaration penalty of £196,727 was imposed. The company was ultimately wound up at the behest of HMRC. The Official Receiver later launched proceedings against the director under the Company Directors Disqualification Act 1986. He emphatically denied any wrongdoing and asserted that he was the victim of a witch hunt or vendetta by HMRC.

In imposing the disqualification, however, the Court noted that the director was an experienced trader in mobile phones and had knowledge of the hallmarks of MTIC fraud and how it operates. Any suggestion that he was not completely au fait with what was going on was unrealistic and incredible. There was overwhelming evidence that the company – and through it the director – was aware that the transactions were connected with the fraudulent evasion of VAT. Alternatively, they had at the very least turned a blind eye to that fact.

Share this article