An IT boss played a major role in leading his struggling firm to owe more than £147,000 to the taxman after he received in excess of £109,000, a report has found.   

Mark Andrew Stokes, of Crosfield Avenue, Summerseat, failed to ensure his IT consultancy firm Red Plane Ltd "complied with its statutory duties to file returns and make payments to HM Revenue and Customs (HMRC) when due", The Insolvency Service has reported.

He also caused Red Plane to "trade to the detriment of HMRC from at least September 22, 2018 in respect of PAYE/NIC, VAT and corporation tax until liquidation on December 5, 2019".

From July 2019 onwards, Mr Stokes "instructed Red Plane’s accountant to make changes to the way drawings were allocated that were to his personal benefit and to the detriment of HMRC".

On liquidation, PAYE/NIC liabilities totalling £77,184 remained outstanding and overdue on liquidation covering periods from the tax years of 2018/19 to 2019/20.

The final payment was made towards Red Plane's PAYE/NIC liabilities on July 11, 2018.

At the date of liquidation, VAT liabilities relating to periods 01/19 to 07/19 remained outstanding and overdue in the total sum of £32,097.

A corporation tax return was submitted for the accounting period ended July 31, 2018 recording a total corporation tax liability due to HMRC in the sum of £26,630, the report said.

Corporation tax owed up to July 31, 2018 was due for payment in full by May 1, 2019.

But no payment was made by Red Plane towards its outstanding corporation tax liabilities due for this period.

As a result, the total £26,630 corporation tax liability remained overdue and outstanding at liquidation.

HMRC was the majority creditor in the liquidation by a significant margin, having claimed £147,539.

From September 22, 2018 to the firm's liquidation on December 5, 2019, Red Plane's current account received credits totalling £349,577 and spent £359,269, of which payments totalling £109,126 were paid to Mr Stokes, £5,894 sent to Mrs Stokes and payments totalling £38,142 made to HMRC.

In July 2019, "Mr Stokes instructed Red Plane's new accountants to process his earnings through payroll including funds previously extracted during months one to four of tax year 2019/20, which had been originally categorised as dividends".

Mr Stokes' decision to instruct the new accountant to reallocate drawings as salary from dividends generated a "significant PAYE/NIC liability" in the sum of £59,570 and increased Red Plane's outstanding PAYE/NIC liabilities claimed by HMRC on liquidation on December 5, 2019 to £77,184.

The Insolvency Service report said: "The consequence of Mr Stokes' decision to account for all of his withdrawals from Red Plane as salary, and therefore via payroll, at a time when he had already become aware of the difficulties Red Plane faced in continuing to trade was to Mr Stokes’ personal benefit." 

It also added this was "to the detriment of HMRC as it created a significant increase in the amount Red Plane owed to HMRC, which remained outstanding on liquidation". 

Mr Stokes, 43, has been disqualified from being a company director for six years.