Secretary of State for Business and Trade v Khan [2025] EWHC 264 (Ch) (13 February 2025)

Secretary of State for Business and Trade v Khan [2025] EWHC 264 (Ch) (13 February 2025)

Mr Khan, as sole director, caused Anderson Security & Trading Limited to claim input VAT on transactions with four subcontractors where no genuine supply took place and where the subcontractors were missing traders involved in VAT fraud. The evidence established that Mr Khan either knew or should have known that the transactions were connected with fraudulent evasion of VAT, satisfying the Kittel principle. His lack of due diligence, the use of cash payments, and the absence of genuine commercial documentation demonstrated unfitness under section 6 of the Company Directors Disqualification Act 1986. The court found the Secretary of State had proved unfitness to the requisite standard.

Citation
[2025] EWHC 264 (Ch)
Parties
Claimant: The Secretary of State for Business and Trade; Defendant: Zafar Ali Khan
Jurisdiction
England and Wales
Judgment Date
13 February 2025
Procedural Posture
Director Disqualification Proceedings / Final Judgment
Outcome
Disqualification order made against Zafar Ali Khan under section 6 of the Company Directors Disqualification Act 1986.
Legal Topics
Director Disqualification, VAT Fraud, Kittel Principle, Unfitness of Directors
Insolvency Law Company Law Tax Law Director Disqualification VAT Fraud Kittel Principle Unfitness of Directors

Case Brief

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Parties

The Secretary of State for Business and Trade

Claimant

Zafar Ali Khan

Defendant

Procedural Posture

Director Disqualification Proceedings / Final Judgment

Legal Issues

  1. 1 Whether Mr Khan's conduct as director of Anderson Security & Trading Limited renders him unfit to be concerned in the management of a company under section 6 of the Company Directors Disqualification Act 1986
  2. 2 Whether Mr Khan caused the company to falsely claim input VAT in breach of the Kittel principle
  3. 3 Whether the Kittel principle applies to the transactions in question

Ratio Decidendi

Mr Khan, as sole director, caused Anderson Security & Trading Limited to claim input VAT on transactions with four subcontractors where no genuine supply took place and where the subcontractors were missing traders involved in VAT fraud. The evidence established that Mr Khan either knew or should have known that the transactions were connected with fraudulent evasion of VAT, satisfying the Kittel principle. His lack of due diligence, the use of cash payments, and the absence of genuine commercial documentation demonstrated unfitness under section 6 of the Company Directors Disqualification Act 1986. The court found the Secretary of State had proved unfitness to the requisite standard.

Court Disposition

Disqualification order made against Zafar Ali Khan under section 6 of the Company Directors Disqualification Act 1986.

Orders

  • Zafar Ali Khan is disqualified from acting as a director or being concerned in the management of a company for a period to be determined in accordance with the court's findings (period not specified in the provided text).