In a very embarrassing situation, the Government may be left with almost £9m bill after a tiny spelling error by Companies House ultimately resulted in the collapse of a 124 year old Welsh family business.
A Welsh firm established in 1875 with roots of over 100 years before found itself unwittingly in administration with the loss of 250 jobs over a spelling error made by Companies House.
Companies House keep a record of companies wound up and credit agencies use this to decide if a company can get credit. In this case, a company called Taylor & Son had been wound up, however, Companies House erroneously told credit agencies that the engineering firm, Taylor & Sons Limited, had been wound up.
Companies House sold this false information to the credit reference agencies. They realised their mistake just 3 days later but in those three days a catastrophic series of events had already been set in motion.
Credit agencies had purchased, and used, the wrong information and within 3 weeks of the error having been made, all of Taylor & Sons 3000 suppliers had cancelled their contracts and credit lines for the company were withdrawn. The level of sums involved in this were catastrophic. The company’s biggest client, Tata Steel, withdrew from contracts leaving the company £400,000 a month poorer and also an expected £3m contract to construct the Royal National Lifeboat Institution’s stations never went ahead. Within 2 months of the error, the Welsh firm had gone into administration.
Companies House, which is an executive agency of the Department of Business, Innovations and Skills, and who keeps the record of companies within the UK denied any wrongdoing, however, a High Court judge ruled this week that it was legally responsible for Taylor & Sons’ collapse. Lawyers for Taylor & Sons valued the claim at £8.8m, however, the amount of damages awarded by the court is still to be decided.
What may have seemed like an innocent error by Companies House has had catastrophic effects for this company. It all shows how important one small letter can be.
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Picture via Welsh Media Ltd