The finance director of a century-old Scottish agricultural machinery business has been banned after under-declaring VAT to HMRC by more than £1.5m
David Alexander Smith, 61, of Inverurie, Aberdeenshire, was a director of FB Realisations Limited, known as Balgownie Limited until a name change in May 2024, and he was the company’s finance director. He had been a director of the business since 2015.
Over a period of three years from 2019 to 2022, Smith submitted false VAT returns for Balgownie Limited, an Aberdeen based agricultural and construction machinery company, by under-declaring more than £1.5m to HMRC without the knowledge of his fellow directors.
Balgownie was renamed as FB Realisations in May 2024 and had annual revenue of £25.7m for year-end December 2022, the last filed accounts, and pre-tax profit of £242,000, with 49 staff.
In the annual accounts for FY22, signed off by Smith himself in June 2023, the HMRC issue was flagged as a principal risk, stating: ‘There is some uncertainty due to the company having a large overdue VAT liability.’ The accounts were audited by Hall Morrice LLP.
FB Realisations subsequently went into administration in March 2024 owing £3.1m, primarily to HMRC and HSBC. The biggest creditor was HMRC with a total claim against the company for £2,274,094.35 for outstanding VAT balances.
Following action by the Insolvency Service, Smith has been banned as a director for 11 years and FB Realisations was bought out of administration by MacGregor Industrial Supplies (MIS) last year, with 15 jobs saved.
Balgownie was set up on Companies House in 1973 but had a trading history dating back to 1907.
The undeclared VAT totalling £1,575,584 consisted of falsely claiming VAT refunds on expenses that were actually for private or personal use rather than legitimate business purposes in the quarter ending December 2018; deliberately understating the amount of tax due on sales made between March 2019 and March 2022, across multiple quarterly returns; and falsely claiming refunds by backdating purchases to earlier tax periods without having valid invoices or evidence to support these claims.
Smith signed a disclosure with HMRC in March 2023 where he admitted deliberately under-declaring the amount of VAT his company should have paid.
Balgownie Limited went into administration in March 2024, with 24 people losing their jobs and creditors owed £3,163,795 in total.
However, 15 jobs were saved when the business and its assets were bought out of administration by another company the following month.
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The director disqualification started on Monday 21 July and it prevents Smith from being involved in the promotion, formation or management of a company, without the permission of the court.
Smith was also declared bankrupt in August 2024 following a petition from one of the company’s creditors.
Richard Bathgate and Graeme Bain of Johnston Carmichael LLP were appointed as joint administrators of FB Realisations on 15 March 2024 by the company’s secured creditor, Royal Bank of Scotland plc, and the company was moved into a creditor’s voluntary liquidation earlier this year.
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