The Secretary of State for Business And Trade v Zafar Ali Khan

The Secretary of State for Business And Trade v Zafar Ali Khan

Mr Khan, as sole director, caused the company to claim input VAT on transactions with sub-contractors that did not make genuine taxable supplies and were involved in fraudulent evasion of VAT. He failed to conduct proper due diligence, ignored obvious red flags, made uncommercial payments, and did not keep adequate records. On the evidence, he knew or ought to have known the transactions were connected with VAT fraud. His conduct rendered him unfit to be a company director under s.6 of the Company Directors Disqualification Act 1986, warranting a 12-year disqualification order.

Parties
Claimant: The Secretary of State for Business and Trade; Defendant: Zafar Ali Khan
Jurisdiction
England and Wales
Judgment Date
14 February 2025
Procedural Posture
Director Disqualification (insolvency) / Judgment After Trial
Outcome
Disqualification order made against Mr Khan for 12 years under s.6 of the Company Directors Disqualification Act 1986.
Legal Topics
Director Disqualification, Fraudulent Evasion of VAT, Kittel Principle, Unfit Conduct of Directors, Input Tax Denial
Insolvency Law Company Law Tax Law Director Disqualification Fraudulent Evasion of VAT Kittel Principle Unfit Conduct of Directors Input Tax Denial

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Parties

The Secretary of State for Business and Trade

Claimant

Zafar Ali Khan

Defendant

Procedural Posture

Director Disqualification (insolvency) / Judgment After Trial

Legal Issues

  1. 1 Whether Mr Khan caused the company to falsely claim input VAT resulting in fraudulent evasion of VAT
  2. 2 Whether Mr Khan's conduct renders him unfit to be concerned in the management of a company under the Company Directors Disqualification Act 1986
  3. 3 Whether the Kittel principle applies to deny input tax deduction

Ratio Decidendi

Mr Khan, as sole director, caused the company to claim input VAT on transactions with sub-contractors that did not make genuine taxable supplies and were involved in fraudulent evasion of VAT. He failed to conduct proper due diligence, ignored obvious red flags, made uncommercial payments, and did not keep adequate records. On the evidence, he knew or ought to have known the transactions were connected with VAT fraud. His conduct rendered him unfit to be a company director under s.6 of the Company Directors Disqualification Act 1986, warranting a 12-year disqualification order.

Court Disposition

Disqualification order made against Mr Khan for 12 years under s.6 of the Company Directors Disqualification Act 1986.

Orders

  • Mr Khan is disqualified from acting as a director or being concerned in the management of a company for 12 years.