YRM failed to pay staff tax, NI and pensions
John Clemow
Administrator confirms depths of cash crisis before practice went under
YRM was so cash-strapped in its final few months that it missed PAYE and National Insurance payments to the Inland Revenue and is understood to have stopped paying staff their pensions weeks before it went under.
The firm went into administration last month with just five jobs out of 25 saved by the decision to sell part of it to RMJM. Among those keeping their jobs were chief executive John Clemow and director Iain Macdonald, who have both been made RMJM principals.
Asked whether he needed to apologise, Clemow told BD: “I worked for YRM for 34 years. Of course I’m deeply unhappy about what happened. A business failure is a business failure.”
But former employees, who were owed two months’ wages when they were made redundant, condemned their bosses’ actions. “I’m of the old school,” said one. “I like to think the captain goes down with the ship.”
This week further revelations emerged of the cash crisis which engulfed YRM in its final months, with news that it deducted PAYE and NI payments from employees’ payslips but did not pass them on. Joint administrator Richard Toone, from accountant Chantrey Vellacott DFK, said: “HMRC is owed employee deductions.”
And in a letter sent to the administrator, employees also claim YRM reneged on a so-called pension salary sacrifice deal due to be paid to Standard Life. Under this, employees have part of their salary paid into their pension plan directly by their employer.
One ex-employee said payments stopped after July. “We paid money in good faith and have not been informed by the directors that the monies have not been paid.” Toone confirmed the issue had been raised with him.
A creditors’ report is expected to be published in eight weeks, but Toone admitted it would be months before he could let creditors know how much they would get back.
He said out-of-pocket employees could apply for money under the government’s statutory redundancy payments scheme.
RMJM’s purchase of part of YRM was completed under a prepack — which lets a firm leave its debts with the administrator.
Employees advised on statutory redundancy scheme
In a letter to ex-YRM employees, the administrator has advised them that they can claim missing money from the government under the Employment Rights Act.
The statutory redundancy payments scheme aims to ensure those who are laid off through no fault of their own receive compensation.
Employees with more than two years’ service are statutorily entitled to a lump sum from their employer, based on age, length of service and contractual earnings up to the current limit of £400 per week.
Joint administrator Richard Toone said the management had tried to sell the whole business in the second half of last year. “But you can’t compel purchasers to prop a business up,” he said.
Toone added that he was asked by YRM to help out at the end of November and said: “I only got involved once all the opportunities had been exhausted.”
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Readers' comments (15)
This just highlights how many architectural practices do not operate correctly as businesses, and are allowed to break employment law without retribution.
having worked with one of these reptiles in the past I cant say I am surprised.....
Adrian Watson
Why hasn't the ARB and the RIBA got involved in this yet? There is no doubt that if a doctor did something like this he would be struck off. I would like to see an article in BD listing who was responsible in YRM for all this and where they are working now so people know who they need to avoid in the future.
There is no future for architects, no jobs, spend 7 bloody years studying and now it's going to cost even more. Great
There are two stories here.
One, noted above which BD has covered well in recent weeks. The second is the failue of ARB as the governing body to act in the public interest in accordance with ARB’s statutory responsibilities. To protect the interest and title of Architect and to protect the public etc, etc.
The profession can not let these charlatans to carry on. ARB needs to investigate and been seen to be doing something even if they can not report on their findings yet. BD needs to report on the potential failure of ARB. We do not know if ARB intends to act. Architects are already fighting a losing battle for respect in the profession lets not loose more credibility.
I agree with the sentiment above. ARB/ RIBA please respond to these comments.
Surely this must come under the laws of fraud or theft? Never mind our apathetic governing institutions, these actions should be addressed in the courts.
Quite apart from being scumbags, I would have thought that there should be some form of professional obligation to look after your staff and business finances.
However, looking at the ARB's Standards of Conduct and Practice 2010, there appears to be little in there about financial diligence, other than safeguarding clients money.
I'm a landscape architect and by comparison the LI code of conduct is pretty clear on this:
"Standard 7 : Landscape Architects should ensure that their personal and professional finances are managed prudently and shall preserve the security of monies entrusted to their care in the course of practice or business."
More specifically:
"The following are examples of acts which may be examined in order to ascertain whether they disclose a wilful disregard by Landscape Architects of their responsibilities or a lack of integrity, namely:
• an order of bankruptcy;
• the placing into liquidation of a company of which they were a director; (other than for amalgamation or reconstruction purposes)
• an accommodation with creditors; (including a voluntary arrangement) and
• failure to pay a judgement debt."
And what is RMJM's response to the events having taken on YRM's directors?
RMJM staff working directly for these individuals beware!
BD asked Arb if it had received complaints from YRM employees regarding the prepack administration of the practice.
Simon Howard, professional standards manager, said: "I’m afraid I can neither confirm or deny that any investigations are on-going in relation to this matter (YRM). Arb investigations only appear in the public domain when/if they reach the Professional Conduct Committee."