'Naive' businessman tells judge he took on Leamington company without realising it owed almost £85,00 to HMRC

He has been sentenced to 100 hours of unpaid community work for failing to comply with his legal responsibilities as a company director
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A judge has described a businessman as 'naive' for taking over a Leamington company without realising its financial troubles.

Didar Sanghera has been sentenced to 100 hours of unpaid community work for failing to comply with his legal responsibilities as a company director

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The 28-year-old's roofing company, Crowntree Investments, did not maintain accounts as required by law and was wound up in 2017 owing almost almost £85,000 to HMRC.

Didar Sanghera has been sentenced to 100 hours of unpaid community work for failing to comply with his legal responsibilities as a company directorDidar Sanghera has been sentenced to 100 hours of unpaid community work for failing to comply with his legal responsibilities as a company director
Didar Sanghera has been sentenced to 100 hours of unpaid community work for failing to comply with his legal responsibilities as a company director

At Gloucester Crown Court yesterday (August 6) Sanghera, of Severn Road, Gloucester, who was not legally represented, explained that he had taken over the Leamington-based business from his brother in 2015.

The company specialised in roofing services within the construction industry.

Prosecutor Derek Perry, for the Insolvency Service, said Crowntree Investments was incorporated in 2009 and two years later Sanghera’s brother became the sole director.

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Sanghera himself became a director on June 30, 2015 and the following day July 1, 2015, his brother resigned.

Mr Perry said Sanghera was before the court for effectively not maintaining company accounts as required by legislation. The company faced winding up orders in April 2017 and it was finally dissolved in October 2018, he said.

"The debt the company owed is disputed. The total deficiency was identified as £334,837 - however the proof of actual debt owed is £84,472 to HMRC and £4,500 to another bone fide company.

“Mr Sanghera’s brother also made a claim for in excess of £220,000. This sum arose during civil court proceedings but he wasn’t able to substantiate his claim with any documentation.

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“In reality, therefore, it was only the Inland Revenue and one company that have lost out.

“This was not due to dishonesty or fraudulent activity but to the way the company was run.”

Sanghera told the judge that the information given to the court by the prosecution was news to him as he had issues with his brother and he was never informed of the financial situation.

Mr Perry added: “The company’s records show that in the last set of accounts submitted in 2015 by Sanghera's brother it had assets of £220,000, of which £170,000 were fixed assets.

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“It is unclear what happened to those assets since 2015 and this should have been made clear in the company accounts, which were never completed or submitted by the defendant.

“The essence of this case is that Sanghera had taken over the company as the sole director but naively failed to maintain the accounts as he was required to do so by law.

“There has also been a delay in this case coming to court due to civil proceedings and the Covid-19 lockdown.”

Sanghera pleaded guilty to a charge that, as a director of Crowntree Investments, he failed to comply with requirements for keeping accounting records between June 30, 2015 and April 11, 2017 in compliance with the Companies Act 2006 in that the business did not preserve its accountancy records for three years from the date on which they were made. He also admitted failing to cause the company to submit adequate accounting records for the same time period.

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Judge Ian Lawrie QC told Sanghera that although a serious case it did not warrant a prison sentence.

“When you became a director of the company you automatically assume significant responsibilities," the judge said.

“These responsibilities are in place to ensure that you protect the company’s assets and that creditors are paid. This includes the Inland Revenue.

“However, I form the view that you chose not to respond to the demands of the HMRC. You were not being deliberately dishonest, but were rather naive about your responsibilities.

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“You couldn’t see the position you were in and chose to ignore it.

“You are a man of good character and I can see from the pre-sentence report that you have shown remorse and regret your actions in doing nothing when you were required to by law.”

The judge sentenced Sanghera to a 12-month community order which includes completing 100 hours of unpaid work. The judge ordered Sanghera to pay £1,937 towards prosecution costs and a victim surcharge of £60.