VAT Fraud Leads to 11-Year Disqualification for Scottish Machinery Firm Director

Posted By: on 21st August 2025

Disqualified

A former director of Scottish machinery business Balgownie Limited has been banned from acting as a company director for 11 years after deliberately under-declaring more than £1.5 million in VAT.

David Smith, 61, who served as finance director, submitted false VAT returns between 2019 and 2022 without the knowledge of his fellow board members. His actions came to light when a financial consultant raised concerns at a board meeting, prompting him to admit to manipulating the company’s VAT records.

An Insolvency Service investigation found that Smith’s conduct deprived the public purse of significant funds, with false declarations including claims on personal or non-business expenses, understating VAT on sales across multiple returns, and backdating purchases without valid invoices.

Balgownie Limited, incorporated in 1973 but with trading roots dating back to 1907, went into administration in March 2024 owing more than £3 million. Twenty-four jobs were lost, though a subsequent sale of the business and its assets the following month saved 15 positions.

Smith signed a disclosure with HMRC in March 2023 admitting to the under-declarations and was later declared bankrupt in August 2024 following a creditor’s petition. His disqualification, accepted by the Secretary of State for Business and Trade, began on 21 July 2025 and prevents him from being involved in the promotion, formation or management of a company without court permission.

Mike Smith, Chief Investigator at the Insolvency Service, said:

“David Smith’s conduct falls well below the standards we expect of company directors. Smith’s misconduct was hidden from his other directors and only came to light when a consultant queried finances at a board meeting and he admitted that he had been manipulating the accounts for several years. By deliberately suppressing VAT payments, Smith deprived the public purse of vital funds that should have gone towards essential public services such as schools and the NHS.”