Construction boss concealed £6.9m from accounts

A director of a construction company has been banned for 10 years after failing to produce financial records for £6.9m in business transactions and abusing covid furlough scheme.

Paul James Boag of Medway was director of BOAG Industries Limited, a construction business based in Kent, but the company went bust having never filed any accounts despite handling millions of pounds worth of funds and covid grants.

The company had never filed any accounts and when the business went into liquidation it did not provide administrators at Live Recoveries Limited with records relating to the period between the company’s incorporation on 26 October 2018 to 16 April 2021, the date of liquidation.

After the company went bust in April 2021, the Insolvency Service launched an investigation into the director, but the lack of records meant it was impossible to determine the source of payments totalling £6,762,715 from BOAG’s bank accounts between 15 May 2020 and 16 November 2020.

There was also no way of verifying receipts totalling £6,973,722 into the company’s bank accounts between 15 May 2020 and 12 November 2020.

In addition, Insolvency Service investigators could not establish what happened to substantial covid support payments claimed by the company during the pandemic.

BOAG received payments of £1,973,023 for Coronavirus Job Retention Scheme claims between 28 May and 12 November 2020.

There was no evidence to show whether those funds were used to pay the employment costs of furloughed employees during the Covid-19 pandemic.

As a result of the lack of records, it was impossible to verify the existence, ownership and value of BOAG’s assets. At the same time there was no way to establish the true tax liabilities of the business for the VAT period from 03/19 to 09/20.

HMRC had raised assessments on BOAG’s VAT returns for the periods 03/19 to 09/20 which resulted in a underdeclared VAT liability in the sum of £151,146. However, HMRC could not establish how much corporation tax or income tax deductions from PAYE employees and subcontractors were due, as well as claims against the Construction Industry Scheme.

In the latest liquidators’ report, it was confirmed that HMRC was a secondary preferential creditor and had submitted a claim for 151,388.59 for unpaid VAT while it was an unsecured credit for a further £50,000 for income tax for employees hired under PAYE contracts. Unbelievably, Boag himself also claimed against the liquidated business for £2,600.

On top of the missing £6.9m, investigators were unable to establish the extent of Boag’s personal remuneration or the final balance of any outstanding director’s loan accounts he held.

So far, the Insolvency Service has banned Boag for 10 years from as acting as a company director.

Boag was also a director of another dissolved company, Secure Consult Ltd, which folded in January 2022 two years after it was set up. According to Companies House, Secure Consult was operating as a temporary employment agency.

To find out more about the implications of insolvency, visit BrAInbox today where you can find answers to questions like Does TUPE apply to insolvency proceedings?

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