A Yorkshire trader who accepted substantial deposits from customers for home improvement work that was never completed has been sentenced to three years and four months’ imprisonment after pleading guilty to fraudulent trading offences.
Glenn Taylor, 68, operated as SGT Trade Windows and SGT Conservatories between February 2021 and March 2022, offering replacement windows, doors, conservatories and building work.
According to Trading Standards, customers were encouraged to pay significant upfront deposits and were assured that protection and guarantees were in place. Some customers received no work at all, while others received only limited or poor-quality work. Customers were repeatedly given assurances regarding commencement and completion dates, with delays attributed to various reasons including health issues and supplier problems.
Eventually, customers were informed that both businesses had ceased trading. Taylor subsequently entered bankruptcy.
One Hull couple paid a deposit of £12,400 towards a £17,400 contract for a new extension and kitchen. After months of chasing for progress updates, they discovered the business had closed and were unable to recover their money.
The National Trading Standards Regional Investigation Team investigated complaints from 16 consumers who collectively lost £93,409. Investigators found that customer deposits had been used to meet existing business liabilities, including wages and other debts, at a time when the businesses were already significantly overdrawn.
The investigation also revealed that Taylor had previously been declared bankrupt on two occasions and had been prosecuted for similar fraudulent activity in 2004.
Following his guilty plea, Taylor was sentenced to three years and four months’ imprisonment and ordered to pay compensation of £10,000.
The Limitations of Due Diligence
One aspect of this case that deserves consideration is the extent to which consumers could realistically have protected themselves. The investigation later revealed previous bankruptcies and an earlier criminal conviction. However, even consumers who had carried out reasonable due diligence would not necessarily have discovered this information.
The UK insolvency system is based, in part, upon the principle of giving individuals an opportunity to make a fresh start. Historic bankruptcies are not permanently available through public searches and criminal convictions are not searchable by members of the public. Consequently, much of the information later uncovered by Trading Standards would simply not have been available to prospective customers at the time they entered into contracts.
This case therefore illustrates the limitations of due diligence when dealing with individuals trading in their own name. Whilst consumers should always carry out appropriate checks, there will inevitably be circumstances where important information is simply not available to the public.
What Due Diligence Can Consumers Carry Out?
Before paying a substantial deposit, establish exactly who you are contracting with. Many businesses trade under a trading style or brand name, but a trading name is not a legal entity. You should identify the actual legal entity responsible for carrying out the work and receiving your money, whether that is a limited company, a sole trader, a partnership or an LLP. Any reluctance, evasiveness or lack of clarity regarding the identity of the contracting party should be treated as a significant warning sign. A legitimate contractor should have no difficulty confirming exactly who is responsible for the contract.
Before paying a substantial deposit, establish exactly who you are contracting with. Many businesses trade under a trading style or brand name, but a trading name is not a legal entity. You should identify the actual legal entity responsible for carrying out the work and receiving your money, whether that is a limited company, a sole trader, a partnership or an LLP. Any reluctance, evasiveness or lack of clarity regarding the identity of the contracting party should be treated as a significant warning sign. A legitimate contractor should have no difficulty confirming exactly who is responsible for the contract.
Once you have identified the legal entity, carry out whatever checks are available. If you are dealing with a limited company, review the information available at Companies House, including the company’s filing history, current directors and any previous directorships held by those individuals. Consumers should also carry out internet searches using the business name, trading style, address and the names of the individuals involved. Independent review platforms such as Trustpilot and Google Reviews may reveal issues, complaints or patterns of behaviour that would not be apparent from official records alone.
For those seeking additional reassurance, NPD & Company (UK) Limited can provide same-day company credit reports on most UK limited companies. These reports can provide information regarding the legal entity, company history, directors, previous directorships, filed accounts, County Court Judgments and other publicly available information that may assist in assessing commercial risk.
However, consumers should be aware that searches are only capable of identifying information that is publicly available or lawfully obtainable. As this case demonstrates, historic bankruptcies, spent convictions and other matters may not be disclosed through routine searches. Due diligence can reduce risk, but it cannot eliminate it entirely.
How Can Consumers Reduce Their Risk?
No system of protection is perfect and no amount of due diligence can completely eliminate the risk of fraud, insolvency or poor workmanship. However, one of the most effective safeguards available to consumers is to pay a deposit by credit card where possible. Depending upon the circumstances, this may provide additional statutory protection that is not available when payment is made solely by bank transfer or cash. Consumers should be aware that this protection is subject to conditions and financial limits.
Consumers should not assume that guarantees, protection schemes or trade body memberships will always provide complete protection. As previous cases have demonstrated, even where protection schemes exist, they may be subject to limitations, exclusions or conditions that affect the level of protection available.
Ultimately, this case serves as a reminder that whilst consumers should carry out sensible checks before parting with substantial deposits, no system is entirely risk-free. Understanding who you are dealing with and choosing the safest available payment method remain two of the most important steps a consumer can take.
