Firms to face commercial litigation over illegal loans?

Published on 9 Aug 2010 under category: legal

More firms could enter into commercial litigation following a huge increase in the number of illegal dividend pay-outs by directors.
HM Revenue & Customs is planning to investigate the steep increase, the Financial Times has reported.
It has been attributed to the impact of the recession on payouts and revenues.
Speaking to the paper, one legal expert said: "Directors need to be careful not to treat their business as a personal piggybank.
"For some owner-managers, it seems easier to break the rules and take an illegal loan from the company than to curb spending."
The Insolvency Service reported this year that more than 2,000 company directors are facing bans this year.
This is more than double last year's figure for disqualifications, standing at 1,047.
Its data also found a 56 per cent rise in the number of cases against directors making non-commercial transactions while their company is going into insolvency.

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