Mystery £1.5 million - this must be dodgy

[WTFisthisabout]

We are currently in the process of making a complaint against a dodgy letting agent - illegal fees, no client money protection, no gas safety record, unfair clauses etc

I've just looked up the company's registered address at Companies House and had a look at their accounts to see what state the company is in as they are taking advance rent payments in lieu of a guarantor but don't have any (legally required) protection for that money (CMP).

They are a tiny company in a run down neighbourhood with only a handful properties on their books, not even a website, although they are on Zoopla etc. They have no assets (just a few £k, probably office equipment), turnover appears to have been £40-60k since they started 6 years ago, profits £5kish on average. The director is owed £30k by the company.

But suddenly, in the latest accounts, they have debtors of over £1.5 million, all companies owned by the director according to the accounts (they aren't named). I've checked the accounts of all the companies owned by the director listed at Companies House. They are all micro companies with a tiny turnover, no sign of the £1.5 million debt.

The director might have companies outside the UK but why would they owe a backstreet letting agent millions of pounds?!!

It's really got nothing to do with the complaint but AIBU to think there is possibly something very dodgy going on here?

That sounds more exciting than you want to see in your letting agent...

YANBU at all to be suspicious. I'm just getting on the thread to see what people think might be going on.

Hiding his assets?

Bumping 'cos I want to know!

Money laundering?

I could be totally wrong here but we had something similar when I was going to make a claim against someone,

He had a LTD company, and knew my claim would make him insolvent and he'd have to close and pay me everything he had. So he got one of his other LTD companies to be his debtor, so when I started the court proceedings and he had to close, he paid "their" debts before mine was granted (basically passed all his assets and money from one LTD company to another), and it was basically legal for him to do it.

That's seriously dodgy @Birkenshock I thought you weren't allowed to pay one creditor over another if you are insolvent or know you are about to become insolvent (which he did know because of your claim).

You might be on to something though. I did notice that his property development company had had a lot of charges registered at Companies House recently, after its last set of accounts. Thousands not millions though.

Maybe he knows that the company is about to fail. If you are insolvent and have assets, when they are sold, the money is split between the creditors proportionately to the amount they are owed if the assets don't cover the debt in full. So if the company has £50k in assets and £50k in real debts, he would lose everything. On the other hand if his other company is "owed" £1.5million, they would get 97% of the assets, £48.5k. The fake debt needs to be huge in comparison to the real debts to get the lion's share of the assets.

I've taken a look at the Action Fraud website here:
www.actionfraud.police.uk/a-z-of-fraud-category/business

They describe several types of fraud, including False Accounting:

www.actionfraud.police.uk/a-z-of-fraud/false-accounting-fraud
False accounting fraud happens when company assets are overstated or liabilities are understated in order to make a business appear financially stronger than it really is.

False accounting fraud involves an employee or an organisation altering, destroying or defacing any account; or presenting accounts from an individual or an organisation so they don’t reflect their true value or the financial activities of that company.
[...]
False accounting is a criminal offence. Regardless of how much money is involved, you should report the fraud to Action Fraud.

There's more relevant material on the False Accounting page, and you may find more again under the other types of fraud.

All in all, I'd suggest dropping a line to Action Fraud and leaving it to them to sift it...

Oh look, they also mentioned Insolvency-Related Fraud:

www.actionfraud.police.uk/a-z-of-fraud/insolvency-related-fraud
Fraud relating to bankruptcy and insolvency can involve companies fraudulently trading immediately before being declared insolvent, or phoenix companies.

I admit I'm confused because you say the company has lots of debtors, not creditors.

But there's clearly something stinky about the whole business.

if this company has the debtors then maybe he is setting up one of his other companies to fail, paying the cash to this one that it has received in bounce back loans for example. However preferential treatment of debtors will be looked at unfavourably by HMRC if they default on a BB laon.

maybe he is setting up one of his other companies to fail

Or, many of his other companies, which may all have received Bounce Back loans?

@PerkingFaintly The tiny dodgy letting agency that has always had a turnover of tens of thousands before has debtors that £1.5 million in it's latest accounts. The debtors are companies owned by the same director but it doesn't give the names of the companies.

There is nothing in the accounts of his other companies that reflect that but the companies have different accounting periods (so the letting agent accounts are more recent) and accounts on Companies House can be up to 23 months out.

Based on Birkenshock's suggestion, I am wildly speculating that his property development company might have a lot of creditors since the last accounts were made up given that there have been quite a few recent charges so maybe he has created a fake debt to his letting agency to protect the property development company's assets.

It can't be anything to do with bounceback loans unless he had a crystal ball and predicted them. It's like self assessment, you don't have to give your accounts to Companies House until the next year so they are not current accounts.

Report to your company registration body. They can investigate.

Others may know the correct place to report, but a quick google suggests reporting to the below will get it looked into

www.gov.uk/complain-company/y/yes-the-company-is-still-active/financial-harm-to-customers-or-suppliers