Liability Investigation

[Apollo 21]

Hi,

I am after a bit of advice on what i need to do?

I was a director in a family business for 26 years & left the business about 16 years ago.
The Business was dissolved nearly 10 years ago. We employed 16 people at that time & 1
of the employees that was made redundant came to work for me.

The beginning of December 2018 i have had a letter with the old companies name on but to my company address stating that the said employee is trying to claim noise induced hearing loss from the
original family business & asking for a list of health & safety records & paper work which will have been destroyed after the 7 year period.

I just need some advice on what i might need to do if anything.

Cheers

 

[Hash and Bash]

You could direct the enquirer to contact The Employers’ Liability Tracing Office (ELTO)
http://www.elto.org.uk/
They should be able to trace any Employers Liability Insurance policies from the period.

 

[scstock]

The beginning of December 2018 i have had a letter with the old companies name on but to my company address stating that the said employee is trying to claim noise induced hearing loss from the
original family business & asking for a list of health & safety records & paper work which will have been destroyed after the 7 year period.

According to my Certificate of Employers Liability Insurance I have to keep the document for 40 years.

This has to qualify as one of the most insane regs out there.

 

[Mr D]

According to my Certificate of Employers Liability Insurance I have to keep the document for 40 years.

This has to qualify as one of the most insane regs out there.

To be fair, claims can be made many years later.
There have been coal miners families claiming just a few years back against employers that employed fathers decades previous that had caused illness and early death. Could be that some of them went back further than 40 years - some mines shut in the 60s and 70s.

 

[scstock]

Yeah I do get that, but the same regs are applied to a micro business employing people in an office as to a coal mine.

 

[smallclaimsassistance]

The legal principles are the same regardless of the employer size. Assume 40 odd years ago you were a trainee in a small office with just you and your boss. His place of business was an old converted shop with the requisite asbestos accessories.

40 years later, you are diagnosed with pneumoconiosis/mesothelioma etc, would you not want the reassurance of knowing that all trace of employer's liability insurance hadn't disappeared?

Dean

 

[scstock]

Then the responsibility should be with the insurance companies to keep those records, maybe on a centralised database, as they are the ones taking the premiums but also because they are far more likely to still be in business and traceable forty years on than most of the businesses that they have insured. Witness the OP who has no records.

 

[smallclaimsassistance]

They do. See second post above.

That said, my point is that there is an eminently justified rationale in the direction that employers retain such records, particularly in view of the fact that any claim starts with the allegation that they (the employer, not the insurer) are responsible.

Injury claims where the date of knowledge postdates the exposure by decades are always life changing. Given the importance of ensuring the retention of a safety net, I think it is highly sensible that the employer is required to keep records, which ensures that if one of the records is mislaid, the information will not be lost.

Dean

 

[scstock]

Dean, in 40 years time I would be 93. Most likely I will be long dead and my business long forgotten. It is a silly law.

 

[Mr D]

Dean, in 40 years time I would be 93. Most likely I will be long dead and my business long forgotten. It is a silly law.

It's possible that employees would be younger than you and maybe health problems come to light as a result of working practices?

 

[scstock]

Ok, but I’m dead and the company doesn’t exist. Where do they go to for the records?

 

[smallclaimsassistance]

Again second post above, if ELTO have the correct/any record, which is unfortunately less likely than it should be (hence my point about a safety net above).

Dean

 

[Lisa Thomas]

Hi I haven't read all the replies so apologies if I am repeating something but this often happens with insurance claims.

When it was dissolved were all creditors paid off? Was it insolvent? Did it go through an insolvency procedure like Liquidation?

The employee will often have to pay to reinstate the Company for the insurance companies to fight it out.

It would probably be helpful if you could pass the details of the company's insurance to the employee/their advisers (if you can remember them).

 

[The Byre]

The beginning of December 2018 i have had a letter with the old companies name on but to my company address stating that the said employee is trying to claim noise induced hearing loss from the original family business & asking for a list of health & safety records & paper work which will have been destroyed after the 7 year period.

The idea that you can destroy your records after just seven years is a myth.

Yes, you are obliged to keep them for seven-to-eight years, but HMRC can launch an investigation that reaches back up to 20 years - and as you can see from the above, some liabilities and obligations last far, far longer!

 

[Pendulum]

Just out of curioisty, what is the source of that obligation i.e. what statutory instrument, and who is so obliged to keep records on behalf of a dead company? What type of records must they keep?

 

[Lisa Thomas]

https://www.gov.uk/government/publi...disposal-policy#retention-and-disposal-policy

 

[Pendulum]

Thanks, but that talks about HMRC's policy on their own record keeping. My question is, in response to The Byre's post, what obligation is there on people connected to a dissolved company to maintain records for it? What statutory instrument requires it, who does it require it of i.e. directors or owners or both, and exactly what type of records?

I ask this not just out of curiosity, but also out of surprise. I find it hard to imagine that duties of any kind could persist after a company dies. Certainly former duty holders could be penalised if it were later discovered that their duties had not been fulfilled and/or misconduct had been committed during the lifetime of the company. It does seem strange to me however that, for example, a former director might have a duty to keep records for an entity that no longer exists.

 

[Lisa Thomas]

See the bottom page here?

https://www.gov.uk/strike-off-your-company-from-companies-register/close-down-your-company

I suppose there is always a chance a Company could be reinstated, especially if there were debts left o/s and it wasn't washed through an insolvency procedure pre dissolution.

 

[The Byre]

I find it hard to imagine that duties of any kind could persist after a company dies. Certainly former duty holders could be penalised if it were later discovered that their duties had not been fulfilled and/or misconduct had been committed during the lifetime of the company. It does seem strange to me however that, for example, a former director might have a duty to keep records for an entity that no longer exists.

Company law is definitely not my forte, but the seven-to-eight year obligation to maintain records does not limit all the other obligations you have under the law in general - criminal law in particular, but also the other public and civil liabilities you may be subject to.

There are time limits on various procedures and liabilities, but this area of law is far too complex to explain here. As I stated above, HMRC can launch an investigation going back 20 years and other liabilities just never time-out.

So instead I want you to think about the following scenario -

You are running a building company that you close for whatever reason. You maintain records for seven calendar years and then bin them and think no more about the company or your records.

25 years later, the steel I-bar holding up a village hall roof collapses and kills ten children at a birthday party. That is a hall you built. An inquiry is launched and it is discovered that the steel bar was resting on a pillar and that pillar was made using insufficient amounts of cement. Indeed, the whole building structure was made using a simple 8:1 mix with no additives, instead of the 3:1 mix with moisture inhibiting additives mandated by the structural engineer.

Over the years, moisture has steadily weakened the entire structure and the hall has to be pulled down. A criminal investigation is launched and the police homicide division comes knocking at your door.

"But I didn't do any of the brickwork or build those pillars. All that work was contracted out to a couple of guys who used to work around here. I just remember they were called Collin and Willie. They billed for the 3:1 mix and even itemised the additives; that much I do remember! The architect, engineer and the council all inspected the building and it passed with flying colours!"

Nobody believes you and you have thrown away all the paperwork proving your innocence. You have thrown away the contact details of Collin and Willie and nobody can remember their surnames. The council has done what you did and destroyed all old records of who was the council building inspector and the architect and the engineer are now dead and their records died with them.

Rich, successful and retired, you are now banged-up and impoverished. "Guilty!" says the foreman. "Guilty as a weasel in a hen-house!"

 

[Pendulum]

I think in that scenario, the prosecution would not be able to establish any guilt beyond reasonable doubt.

I'm not commenting on whether retention of records after the company's dissolution is wise or not; the thing that piqued my curiosity is whether there are actually any legal requirements for directors and/or shareholders to retain any records.

I'll offer a scenario for your consideration, a variation of yours. The jury find the former building company owner innocent of manslaughter. The prosecution also made a charge of dereliction of duty or some such, because he did not keep the relevant documentation for posterity.

He points out, in his defence of that charge, that the company had been in business for 100 years, and had a 15 sqm storage room chock full of documentation relating to over a 1000 building jobs done, accounting records, invoices, personnel records, health & safety etc.

At the point the company went bust, after he tried to prop up the business founded by his great grandfather with every penny he had, he became bankrupt and subsequently homeless, and so had no means to retain the company records. Is there really some offence against the state there?

Coming back to what you said about keeping the records for seven or eight years, put to one side whether it's a good idea; is there any statutory duty on a former director or shareholder to keep them for even one year...or even one week? If so, where is he supposed to keep them if, for example, he shares a one bedroom flat with his wife and two children and is barely paying his personal bills?

 

[The Byre]

I think in that scenario, the prosecution would not be able to establish any guilt beyond reasonable doubt.

Then you have considerably more faith in the jury system than I have! Juries have an insidious tendency to want to 'solve' a case. Instead of asking themselves "Has the prosecution proven beyond all reasonable doubt, the guilt of this person?" they try to ask themselves who is the most likely culprit - a question they are not supposed to ask or answer!

the thing that piqued my curiosity is whether there are actually any legal requirements for directors and/or shareholders to retain any records.

Yes, for seven calendar years and the company's books for (I think - not sure) ten years. It's ten years in Germany, so I assume it's similar in the UK.

Coming back to what you said about keeping the records for seven or eight years, put to one side whether it's a good idea; is there any statutory duty on a former director or shareholder to keep them for even one year...or even one week? If so, where is he supposed to keep them if, for example, he shares a one bedroom flat with his wife and two children and is barely paying his personal bills?

Yes, as above.

However he/she can keep them electronically - and if HMRC suspect tax fraud, they can go back 20 years.

But here is a real-life event for you to contemplate -

From 1980 to 1990, a computer wholesale company called SEH imported their chips via a Swiss import agency. In about 1990 they were bought out by a Dutch company who imported all their stuff directly. We did a fair amount of business with them.

In around 2000 Customs and Excise came a knocking and wanted proof that all those chips that came into the country via Switzerland had been declared and all the import duty (which at the time was very high) had been paid.

The original owners were contacted and they told them that all the import duty documentation was in their files that the Dutch company had taken over.

Problem - when the HQ was moved to Holland, anything over ten years old was binned, so C&E handed them a bill for £30m in estimated unpaid duties. SEH had to fold.