UK Immigration Enforcement by Insolvency Service for Company Directors Employing Illegal Workers

As well as fines of £20,000 per illegal worker, the UK Government imposes immigration enforcement via the Insolvency Service by now regularly utilising their powers under the Company Directors Disqualification Act 1986 to ban those that employ illegal workers from being a UK Company Director for six years. A company director disqualification can severely impair any entrepreneur’s ability to successfully run a business in the UK, both in the period of the ban and also thereafter.  

UK Government Policy: Fining and Banning Directors who Employ Illegal Workers

The severity of the actions of the Home Office and the Insolvency Service highlight the critical need for HR departments to engage business immigration solicitors to ensure the deployment of thorough business immigration right to work checks and careful HR employee screening policies to avoid immigration enforcement action. In addition, if facing a Civil Penalty, it is now even more prudent to legally challenge the Home Office Civil Penalty given the dire economic consequences of a Director’s Disqualification including an appearance on the Register of Disqualified Directors at Companies House.

UK Civil Penalties and Immigration Enforcement: Immigration, Asylum & Nationality Act 2006

IANA 2006 renders employers responsible for preventing illegal working in the UK by immigration enforcement. For example, there is a civil penalty regime under IANA 2006 and section 35 of the Immigration Act 2016. This allows the Home Office to initiate criminal proceedings against employers who knew or should have known they were employing workers illegally. The consequences are fines of up to £20,000 per illegal worker. The civil penalties are harsher for repeat offenders and large scale employment of illegal workers.

Director’s Disqualification:  Company Directors Disqualification Act 1986

Another example of immigration enforcement is that in addition to Directors of companies who breach the IANA 2006 and suffer civil penalties, they may be further penalised under CDDA 1986. There is clearly a UK Government policy to seek to ban such directors. It appears that the Insolvency Service has been tasked with disqualifying directors, regardless of whether the company was in liquidation or not (which is the usual trigger event for the Insolvency Service to take action).

The involvement of the Insolvency Service may also be due to non-payment of the massive financial penalties. Such penalties can often be challenged by competent business immigration solicitors and either eliminated or reduced to an affordable sum which could eliminate the possibility of director disqualification.

Joint Insolvency Service & Home Office Immigration Enforcement Action

The Home Office reported in a press release reproduced below, that the directors of 11 separate businesses across the UK had been recently disqualified for failing to ensure that their companies complied with statutory obligations under IANA 2006.

The businesses were visited by Immigration Enforcement and having failed to produce documents which confirmed certain employees had the correct permission to work in the UK, were fined. The businesses included a textiles manufacturer, a petrol station and several restaurants in London, Newbury, Reading, Slough and Leicester.

Following their visits, Immigration Officers issued a civil penalty notice to the employers. The businesses had employed a total of 39 illegal workers resulting in total fines of £450,000. It is understood that the fines were not successfully challenged and instead went unpaid.

Impact of UK Policy: £450,000 Civil Liability Fines & 6 Year Director Bans

The cases were then referred to the Insolvency Service who carried out their own investigations, leading to the disqualification of the 11 directors. The disqualified directors have each been banned from being a company director or being involved in the management of a company for 6 years.

It is vital for businesses to ensure they carry out the right to work checks correctly and respond to and/or challenge any information requests or civil penalty notices to avoid further immigration enforcement action, ideally with professional legal advice from an immigration solicitor or barrister.

Legal Advice: Preventing Immigration Enforcement Action from Right to Work Checks & Challenging Civil Penalties

If you have been issued with an information request or wish to challenge a civil penalty, please get contact with our business immigration team today. Our team of experienced and professionally qualified solicitors and barristers will be able to guide you through the process step by step and limit the possibility of failure by complying with the strict letter of the law. Please call us for a telephone case assessment on 02071830570. If you wish to consider your options, please call our Immigration Team so we can assess your matter and if necessary advise you of the next steps you should take in a consultation.

We are based in the legal epicentre of London, just across the road from the Royal Courts of Justice in order to ensure we get the best results for our clients.  We are minutes away from the Immigration and Asylum Tribunal, the Royal Courts of Justice and other central London courts.

We can ensure that you remain compliant with your immigration law obligations. Get in touch with our business immigration lawyers now on 02071830570.   You can also reach us via our contact form.

UK Government Press Release: Warning on employing illegal workers as directors of 11 companies are disqualified

The director of a Reading-based butcher and the director of a company operating a café in Keighley, Yorkshire, have become the latest company directors to receive lengthy bans for employing illegal workers.

uk business immigration
Director Disqualification for Employing Illegal Workers

In all directors 11 separate businesses across the country have been disqualified recently, all of whom were already fined for employing illegal workers. The disqualifications all follow investigations by the Insolvency Service. The businesses include four restaurants, three butchers, a café, a clothing manufacturer and a petrol station.

They are based in Leicester, London, Newbury, Farnborugh, Reading, Slough, Keighley, West Yorkshire and Lincoln. Between them, they employed 39 illegal workers and were fined a total of £450,000 by the Home Office, which was not paid. Three of the companies have now entered into liquidation.

The Insolvency Service is working very closely with Home Office Immigration Enforcement to take action in cases where the company is still active and not subject to insolvency proceedings . The 11 have been banned from being company directors or being involved in the management of companies for six years each.

The matters leading to all of the disqualifications are that the directors failed to ensure that the companies complied with statutory obligations under The Immigration, Asylum and Nationality Act 2006 to ensure that relevant immigration checks were completed and copy documents retained, resulting in the employment of illegal workers.

Following visits from Home Office Immigration, during which the breaches were discovered, the companies were issued with penalty notices ranging from £10,000 to £15,000 per worker, which remain unpaid. All were directors of the companies and were in office at the time of the Home Office visit.

Commenting on the disqualification, Cheryl Lambert, Chief Investigator at the Insolvency Service, said:

Employing illegal workers is not a victimless crime. These directors sought an unfair advantage over their competitors by employing people under the radar who were not entitled to work legally in the UK.

If a company is found to be employing illegal workers and not carrying out the checks they are required to by law, then the Insolvency Service will take action to remove the directors from the market place, regardless of whether the company is in Liquidation or not.

This action is a warning to other employers to seriously consider their duties and obligations.

The disqualified directors are:

  • Kit Bing Cheung, director of Littleson Ltd, of Sutton, disqualified on 11 July 2016
  • Shaik Miah, director of Ferndown Tandoori Ltd, of Christchurch, Dorset, disqualified on 12 August 2016
  • Nazim Uddin, director of Best Buy London Ltd, of London, disqualified on 22 September 2016
  • Shipa Ahmed, director of Mooncastle Ltd, of London, disqualified on 28 September 2016
  • Sasi Kandasamy, director of SPK Retail Ltd, of Wakefield, disqualified on 29 September 2016
  • Fardin Khan, director of Saweria Trading Ltd, of Brentford, disqualified on 6 October 2016
  • Taher Taimus, director of Three Diamonds Newbury Ltd, of Newbury, disqualified on 12 October 2016
  • Najaranabanu Mubarakhusein Ugharadar, director of Stylz Design UK Ltd, of Leicester, which entered into Liquidation on 13 July 2016, disqualified on 17 October 2016
  • Muhammad Iqbal Chowdhury, director of Fresh Mint UK Ltd, of East Finchley, disqualified on 31 October 2016
  • Mohammed Shabaz Ayub, director of Kenya Butchers Reading Limited, of Romford, disqualified on 5 December 2016
  • Mr Aamir Khan, the director of a cafe company trading under the name ‘Café Aamir Khans’ in Keighley, West Yorkshire, of Shipley, disqualified on 9 December 2016

Notes to editors

Najaranabanu Mubarakhusein Ugharadar (date of birth: 31 January 1987), is of Leicester. Stylz Design UK Ltd was incorporated on 30 April 2013 under CRO number 08510681, with its registered office 109 Coleman Road, Leicester, LE5 4LE.

The company traded as a textile manufacturer, from premises at 93 Constance Road, Leicester, LE5 5DF.

On the 13 July 2016, the Company was placed into Creditors Voluntary Liquidation., wit liabilities of £120,861, which includes the Home Office penalty listed as £51,667. The total deficiency, including shareholders funds is £115,961.

On 17 October 2016 Najaranabanu Mubarakhusein Ugharadar entered into a voluntary undertaking not to act as a director for 6 years. His disqualification commenced on 7 November 2016.

Muhammad Iqbal Chowdhury (date of birth: 6 December 1979), is of Cumbria. Fresh Mint UK Ltd was incorporated on 12 November 2012 under CRO number 08296473, with its registered office at 72 Farnborough Road, Farnborough, GU14 6TH.

The company traded as restaurant with the trading name Paprika Indian Restaurant, from premises at the registered office address.

On 24 May 2016, the Company was placed into Creditors Voluntary Liquidation, with liabilities of £116,270, which includes the Home Office penalty of £75,000. The total deficiency, including shareholders funds is £116,356.

On 31 October 2016, Muhammad Iqbal Chowdhury entered into a voluntary undertaking not to act as a director for 6 years. His disqualification commenced on 21 November 2016.

Café Aamir Khans Limited (Company Registration No. 09267431) was incorporated on 16 October 2014 and traded from 37-39 Bradford Road, Keighley, West Yorkshire BD21 4BW.

Mr Aamir Khan (date of birth 6 February 1990) was the sole registered director from 16 October 2014, the date of incorporation, until liquidation.

The company went into liquidation on 23 October 2015. On 18 November 2016, the Secretary of State for Business, Energy and Industrial Strategy accepted a Disqualification Undertaking from Mr Khan, effective from 9 December 2016, for six years.

All public enquiries concerning the affairs of Café Aamir Khans Limited should be made to: The Official Receiver, Public Interest Unit, 2nd Floor, 3 Piccadilly Place, London Road, Manchester, M1 3BN. Tel: 0161 234 8531 Email: [email protected].

A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:

  • act as a director of a company
  • take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
  • be a receiver of a company’s property

Persons subject to a disqualification order are also bound by a range of other restrictions.

Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.

Further information on director disqualifications and restrictions is available.

The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice.

Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available.

All public enquiries concerning the affairs of the companies should be made to: Cheryl Lambert, Head of Outsourced Investigations, Investigations and Enforcement Services, The Insolvency Service, 3rd Floor, Abbey Orchard Street, London SW1P 2HT. Tel: 0207 596 6117. Email: [email protected].

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