£148,000 hole as employers given credit for nurseries cash

Under the scheme, the chamber acts as an intermediary, receiving money from employers who deduct money from their employees’ wages to cover the cost of vouchers.

Each parent can receive either 55 or 243 per month in vouchers, which can be redeemed at an Ofsted-approved childcare provider, such as a nursery.

In a report to the directors in connection with a creditors’ agreement that saves the chamber from liquidation, Jonathan Philmore, of Wakefield-based Tenon Recovery, states: “I am aware of a significant deficit on the chamber childcare account due to the utilisation of those monies to fund the day to day trading of the business. It is possible in light of the above that a liquidator may consider a claim for wrongful or fraudulent trading.”

But Steven Bonfield, the Mid-Yorkshire Chamber of Commerce’s company secretary, denied there had been any wrongful or fraudulent trading and stressed that all childcare providers had been paid on time and the deficit in the account was due to a “credit gap”.

He said the chamber had always ensured that income it received from contributors to the childcare fund was taken from accounts when they were due for payment.

He added: “Unfortunately, some contributors, particularly the larger ones, have become slower to pay in these challenging times and have taken credit.

“The income pot received incorporated funds provided by those contributors who paid on time, which strictly speaking, had not become due for payment out. The deficit which has arisen in the trading account is, in effect, the credit gap which has accrued over a period of time as a consequence of the chamber having adopted this practice.”

Mr Bonfield stressed that funds received by the chamber have always been held in separate accounts at separate banks, to keep the proceeds apart from the chamber’s general funds.

The directors had been advised that a liquidator might argue the receipts were general chamber funds and could take them for the general use of creditors.

He added: “To prevent that situation from arising, the directors immediately took steps to open and transfer the childcare voucher receipts into a separately designated trust account governed by a deed of settlement and operated by three directors in their capacity as trustees.

“A claim for wrongful or fraudulent trading would only arise if the chamber went into liquidation and the liquidator subsequently decided that the directors had allowed the chamber to continue to trade, incur debts and take credit while knowing that the chamber was insolvent.”

He said it was “theoretically possible” that if the liquidator annexed the childcare voucher income for general creditors, any contributor who lost money might argue that by failing to ring fence the income in a trust account the chamber had not acted correctly.

Mr Bonfield added: “Theoretically, in these circumstances any contributors so affected might have been in a position to petition the liquidator to commence proceedings for wrongful or fraudulent trading. As the directors acted immediately on the advice of the nominee (Mr Philmore) to prevent that situation from happening, it is unlikely to arise.”

He said the chamber had addressed the problems with the deficit in three ways. It had filled the “credit gap” with cash and established a trust account, to separate money collected for the scheme from general funds and to enable timing of payments to be controlled .

He added: “The third element, which is the most difficult, is for the chamber to tackle and resolve the issue of those contributors who use the scheme but habitually pay late and who have accordingly been subsidised by those who regularly pay on time.

“That will no longer happen because of the introduction of the trust account, although there will have to be a catch-up period while the credit gap is closed.”

The Mid-Yorkshire Chamber of Commerce dates from 1875 and employs about 50 staff across Wakefield, Huddersfield and Halifax. It serves businesses who pay a membership fee.

The chamber has stressed that it is “business as usual” following the approval of the CVA.

David Horsman, one of the chamber’s directors, criticised Government policy over business support services.

He said: “Successive Governments have failed to deal with the lack of an adequate business support network, preferring to go for the quick fix of short term schemes and projects which invariably cost a great deal to set up and have the disadvantage of termination expenses.”