Jurisdiction(s):
United Kingdom

Secretary of State v Low: MTIC fraud, wilful blindness and director disqualification—responsibility despite secondary role; ten‑year order under CDDA 1986 (England and Wales)

Published on: 04 September 2024

Published by a LexisNexis Restructuring & Insolvency expert

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Article summary

Secretary of State for Business and Trade v Low and another [2024] EWHC 1812 (Ch)

What are the practical implications of this case?

This decision carries notable weight and will attract attention from insolvency practitioners, given the court’s readiness to attribute responsibility to Mr Low for the Company’s participation in missing trader intra‑community (MTIC) fraud without proof that he actually knew of any specific link. Moreover, even though the court accepted Mr Low’s testimony and contention that his role in the Company’s operations was subordinate to at least one other individual with managerial responsibility, his status as a director, by itself, left him accountable for the Company’s financial affairs. Because the Company’s trading bore multiple classic indicators of MTIC fraud, and there was no evidence that Mr Low had carried out appropriate verification or due diligence, the court concluded that his behaviour failed to meet the requisite standards of probity and the norms expected of those considered suitable to serve as company directors. Accordingly, in the absence of proper checks, the court was willing to find him culpable for the Company’s conduct notwithstanding his secondary involvement, treating the obligations of directorship as sufficient to fix responsibility in law...

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