Selling a hotel that you don’t own – what could possibly go wrong?

One of the general duties of company directors is to exercise reasonable skill, care and diligence.

Three directors by the name of Robin Reichelt, Stephen Nathan and John Gibbs were clearly not exercising any of these attributes though.

Whilst on the face of it their plan to reclaim VAT on the purchase of a hotel sounded ok, in reality there were a number of things which didn’t quite work or to put it more bluntly, a couple of things which were completely illegal.

The background to the situation was that one of their group companies sold a lease to a central London hotel to another of their group companies.

The company that “sold” the hotel went into liquidation after selling it and the company that bought the hotel then submitted a claim for a refund of over £200,000 of related VAT.

The whole thing was completely illegal however as not only did they not pay the VAT in the first place (so had nothing to claim back) but the hotel didn’t even belong to the group company that had claimed it had sold it!

So, in summary they claimed to have sold a hotel that they didn’t even own to another group company and claimed back VAT that had never been paid. What could possibly go wrong??

Well, they will have several years in jail to contemplate what went wrong and to plan their next great money making idea…

The ExP Group