Wilson v The Secretary of State for Business and Trade [2025] EWHC 691 (Ch) demonstrates that permission to act as a director under s 17 Company Directors Disqualification Act 1986 and under s 216 Insolvency Act 1986 is not granted as a matter of course.
In October 2024, Mr Wilson gave a disqualification undertaking for 10½years for having caused four companies that had gone into liquidation in 2020 and 2021 to obtain second government backed bounce back loans (BBL). This is contrary to the BBL scheme when he ought to have known that the companies were not entitled to them, having previously obtained BBLs from different banks; and for failing to ensure that those companies used the entirety of each loan for the benefit of the company, instead transferring at least some of the funds obtained to his personal bank account. Mr Wilson sought permission to act in relation to 15 companies in a corporate structure consisting of a holding company under which certain companies owned the leases of various restaurants, others operated them, and one employed the staff. At an initial hearing in November 2024, Deputy ICC Judge Parfitt granted interim permission to act, subject to conditions, and adjourned the applications to a further hearing. The applications eventually came before ICC Judge Barber in December 2024 and again in February 2025.
The history of the applications had been far from smooth by the time they came on for final disposal before ICC Judge Barber. Mr Wilson’s first and second affidavits in support of his applications were found to contain material inaccuracies as to whether the companies were solvent and up to date with all tax returns and payments, one of the conditions for interim permission. In fact they had a history of late payment of taxes and, as at 6 November 2024, several of them had significant outstanding tax liabilities. An explanation of Mr Wilson’s delay in making his s 216 application (that he had not been told of the need to apply until recently) was also found to be misleading: the liquidators of the former companies had in fact written four separate letters to him warning him of the effect of the restrictions applicable under s 216 and enclosing copies of the provisions in the Insolvency Act, something that had not been drawn to the attention of the judge at the November hearing.
ICC Judge Barber was not satisfied with Mr Wilson’s later explanation for his earlier false statements. The arrears, Mr Wilson said, arose as a result of the involvement of a former employee in the financial matters of the companies which had led to the tax arrears arising. The employee had been removed, and steps had been taken to bring the arrears up to date by entering into time to pay agreements for some of the companies subject to the applications. The judge pointed out that the question of why the arrears had arisen was distinct from the question of how Mr Wilson had come to make the false statements in his two initial affidavits.
The judge referred to the test applicable to an application for permission to act as set out in Rwamba v Secretary of State for Business, Energy and Industrial Strategy by Miles J. Having done so, she set out the following factors as relevant in the case before her:
(1) The nature and seriousness of the conduct which led to the disqualification undertaking. The judge accepted that there had been no finding or admission of dishonesty and that the grounds of unfitness in the undertaking did not involve trading to the detriment of HMRC but breaches of the BBL scheme, so the conduct relied on in the disqualification proceedings was unlikely to be repeated. Nonetheless, the basis of disqualification was serious, a top bracket case; and as made clear in Rwamba, the court was not limited to consideration of the facts and matters giving rise to the disqualification; the question was whether in all the circumstances it was appropriate to give leave.
(5) The judge mentioned a number of matters which she declined to take into account against Mr Wilson, but she did consider relevant the fact that the group’s operations involved the employment of approximately 180 staff, albeit through one company.
(7) The purposes of disqualification, including protection of the public and deterrence, were relevant factors. “When considering protection of the public,” the judge said, “it is in my judgment legitimate to take into account [Mr Wilson’s] conduct in these proceedings.”
(8) The self-serving inaccuracies and untruths in Mr Wilson’s affidavits demonstrated a lack of probity. Even if it could be said he did not know some of his statements to be so, making them still displayed, at best, “incompetence to a marked degree and a reckless disregard for the truth.” Mr Wilson similarly made selective and self-serving reference to documentation in the proceedings.
(12) The full extent of the companies’ tax liabilities remained unclear.
“Drawing on the guidance given in Rwamba, I remind myself that the onus is on the Claimant to persuade the court to grant Section 17 permission. On the evidence before me, the Claimant has failed to discharge that onus.”
Mr Wilson’s application under s 216 also failed for the same reasons..
A director facing disqualification will often be advised to submit to an undertaking and seek relief under s 17 on the basis that that course is more desirable in terms of saving costs – unless there is a strong chance of successfully defending – and that is often the better course to take. The Secretary of State will often be content not to resist an application where conditions can ensure the appropriate level of public protection. But breaches of such conditions where interim permission to act has been granted will usually be fatal, especially, as it was here, where the solvency of any new companies is seriously in doubt.