In January 2022, the Court granted summary judgment in favour of the liquidator of Umbrella Care Limited against several former directors for their involvement in a labour supply fraud. The company deducted PAYE and NIC from employee wages and received VAT from customers, but most of that was never paid to HMRC - instead it was diverted to third parties or used to purchase properties in the names of some of the directors and it submitted false returns to conceal the true position. HMRC’s claim in the liquidation stood at almost £36.5 million.
In December 2022, the Court assessed damages against various defendants, whose positions were all slightly different:
- One director was ordered to pay equitable compensation for breach of trust assessed at £21.8 million. This was the amount required to put the company in the position it would have been in had the breach not occurred (in line in Target Holdings v Redferns). This was equivalent to HMRC's claim less the amount realised to date.
- A second director was held to have breach his duties through his inactivity and failure to safeguard the company’s assets. He was ordered to pay damages of £8.3 million, equivalent to the unpaid PAYE, NIC and VAT incurred during the time that director was in office, but after giving credit for a property which the company purchased during that time which it had since realised.
- Various other defendants who received proceeds and used them to purchase properties were liable in knowing receipt, and damages assessed at a level to reflect the amount needed to make good the amounts received from the company.
Umbrella Care Limited v Nisa [2022] EWHC 3139 (Ch)