A silly story

The idea that the Force India team will miss the Formula One season because it has failed to file accounts with Companies House in London is just daft. This is a multi-million dollar business, employing 250 people and one piece of late paperwork may get the bureaucrats in a tizzy, but it is not going to stop the team from racing. It will not take long for the number-crunchers to do the necessary. Perhaps the team should be more organised and file its returns in a more efficient manner but to extrapolate that into an “F1 team under threat” story is really stretching for a story. One might even suggest that it is irresponsible and it is surprising to see the Daily Telegraph running such stuff. It is really unfair on the Force India workforce and their families.

Force India will run its car for the first time today at Silverstone and the team will be in action next week in Spain. From what I am hearing the new car is a decent step forward compared to the old one and it should thus continue the team’s progress through the field. It will be interesting to see whether or not the car is still better on the very high speed tracks as was the case last season, notably at Spa and Monza where the team might have won. This is a sterling effort for a very small team and while Mallya’s attitude to doing business is rather too laisser-faire for his own good, one cannot fault the technical team at Silverstone who are producing a very competitive car for very little money. I have never been a great believer in Adrian Sutil. I think he is fast but he does not seem to have learned much over the years and is still making the kind of mistakes one sees from novices. Tonio Liuzzi, on the other hand, is still I believe the great undiscovered ace in Formula 1 – and has the charisma that could one day make him a real star. I know I bang on about it, but this is the best chance he has had yet and I hope that Mallya is smart enough to use that to his advantage and not do what Red Bull did and mess around with Liuzzi, whil trying to make up its mind whether it should have racing drivers who are fast, or racing drivers who are cool.

30 thoughts on “A silly story

  1. Alex Andronov mentioned in the Sidepodcast comments that one reason the paperwork is late is that there may be a serious financial hole that needs to be plugged first. Any truth to that?

    1. I have no idea. What kind of a hole? If money is outstanding presumably someone will be asking for it. And that person has the right to get a winding up order if he is not paid. It should not really make much difference in terms of the accounting procedures. There may be financial troubles that the team needs to solve – getting money out of India, for example – but the paperwork is not the issue.

  2. ‘it is surprising to see the Daily Telegraph running such stuff’

    It’s really not… they’re only one rung above the Daily Mail when it comes to excessive sensationalism.

  3. Mind you, it’s long been rumoured Force India owe money for various things, which is why someone tried to impound the cars at a race last year. (how’s that for being short on detail ! ) Maybe the late submission is so a potential sponsor, that can fill the financial hole, is not put off.

    I agree though the paperwork alone will not stop them racing.

  4. I agree Liuzzi was sadly underappreciated by Red Bull, it’s a shame his F3000 championship win came when the series was on it’s knees. At least he got to F1 unlike some of the prior champs (e.g. Wirdheim). Is Liuzzi still managed by Peter Collins?

    Both drivers will have Paul di Resta breathing down their necks this year.

    The final filing date was brought forward a month in a recent change in regulations (co’s have 9 months rather than 10), which may have caught them out.

  5. Late company paperwork is just that. Late. Nothing special about it. People miss deadlines all the time, for a variety of reasons, usually cockups or unavoidable.

    Having no money is not a cause of (or reason to) filing late.

    You don’t file late for any other reason than something went wrong with the filing. See below.

    I’ve done it twice:
    1) Timing mistake by accountant. Fined £100 pounds by Companies House (its a mandatory fine for being late). Accountant paid the fine. It was a genuine mistake caused by misinterpreting two different dates. We changed things after this so the misinterpretation could never happen again.

    2) Accountant died. During the handover to the new accountants we missed the deadline. Not fined – we told Companies House and they realised these thing happen.

    All of these “file late to help a sponsor” arguments are totally bogus. Filing late is a single of a mishap or a sign of incompetence, something that would perhaps, ever so slightly, put a sponsor off, not help them climb aboard.

  6. I agree with you that a bit of late paperwork shouldn’t imperil a team. But there’s been quite a few stories about Force India and bills not being paid in a timely (or complete) manner.

    It just seems here that there must be a slight spark of fire to give off so much smoke.

    Who knows the detail, but I do think Force India are a marginal operation. VJ Mallya might be a quite charismatic character, but his businesses have not been doing well in the past 18 months.

  7. “…whether it should have racing drivers who are fast, or racing drivers who are cool”

    whoa joe, come on! Liuzzi is cool! He’s possibly the coolest driver on the grid!

    1. Yes, he is cool but he was told to be cool by Red Bull and then later told that he was too much of a party animal. That was the Austrians either being muddle-headed or devious. Tonio is cool and charismatic and very serious about racing. His reputation for partying is based on the stupid antics of the Red Bull image-makers…

  8. For almost 30 years I’ve worked in the company information and incorporation industry and can confirm that a company that fails to file it’s accounts on time proceeds through a fairly rigid regime of fines and warnings. This regime should be taken VERY seriously as it can very quickly result in dissolution.

    The automatic fines for lateness are rigid but not punitive. £150 for not more than one month. £375 for up to 3 months. £750 for up to 6 months and £1500 for over 6 months. Hardly large amounts I’m sure you’ll agree.

    The bigger problem is that a company can be ‘struck off’ the register for failing to file. This process is popularly known as gazetting. This basically warns the company that if they don’t comply, they will be removed from the register.

    The gazette process involves publishing in the London Gazette an intention to strike the company from the register in 3 months if no objections are received.

    If no objections are forthcoming and a company is ‘struck off’ the consequences are very serious. From the date of dissolution, any assets of a dissolved company will be ‘bona vacantia’. Bona vacantia literally means “vacant goods” and is the technical name for property that passes to the Crown because it does not have a legal owner. The company’s bank account will be frozen and any credit balance in the account will be passed to the Crown.

    It is a matter of public record at Companies House that FORCE INDIA FORMULA ONE TEAM LIMITED (Registration Number 02417588) is in default of it’s obligations having only filed accounts to the year end 31/12/07. The 2008 accounts should have been filed by 31/10/2009. (The company has several previous names: SPYKER F1 TEAM LIMITED, SPYKER MF1 TEAM LIMITED, MIDLAND F1 RACING LIMITED, JORDAN GRAND PRIX LIMITED and TOTAS EUROSERVICES LIMITED).

    The public record also shows that the first gazette notice was issued by Companies House on 26th January 2010.

    Were there to be no objections the company could very easily be dissolved. It can later apply to be restored to the register but this is a process that involves filing all the late documents and applying to the Registrar of the Companies Court in London. It can be a long process and assets remain Bona vacantia until it is complete.

    The reason this company will probably NOT be struck off is that there will probably be objections from ‘interested parties’, people owed money for example. Objections must be in writing and sent to the registrar of companies with any supporting evidence, such as copies of invoices that may prove the company is trading.

    From the public record I can also see that there are a couple of other companies that appear to be associated with the one mentioned above. FORCE INDIA FORMULA ONE LIMITED (03660294) is also late filing it’s 2008 accounts but no gazette has yet been issued, but soon will I would guess. FORCE INDIA BRAND LIMITED (03468947) has filed accounts to 31/12/08 so they are up to date.

    I regularly deal with companies who are blasé about their filing obligations. Very many of them ignore the warnings thinking dissolution is not going to happen to them. But it does happen. It happens every day of the week.

    One last thing Joe, Companies House is not in London. It was moved to Cardiff about 30 years ago, although there is a small satellite office in London.

  9. Over the last few years I have seen all the broadsheets slowly lower their standards to become just pure Tabloid.

    The cut ‘n’ paste generation.

    Spelling, grammar, even proof reading, all bad.

  10. Hi Joe,

    Having been reading your blod regularaly but posting after a long time.

    I personally think Mallya has a very good management style. He fosters freedom with responsibility and accountability. He has given key people what they need to perform and allows them time to display results. He has been a very positive influence on the staff of a a team which has changed ownership maybe 3 to 4 times. The progress in there for everyone to see. I won’t be surprised if Force India are a consistent upper middle-order team.


  11. No smoke without fire. They have repeatedly (3 times) filed late, very late, each time just before serious action is taken against them, there is no excuse for that. They are covering something up.

  12. “Totas Euroservices Ltd”? What’s that all about? I presumed JGPL was formed anew rather than being EJR, but what the heck is that?

    As for Force India, it’s not as if they forgot to, y’know, actually file an entry for the F1 World Championship like a certain champion team once did…

  13. Kudos, Joe. I wish more reporters would call out Sylit on his half-baked – and yes, irresponsible – financial analyses, and more often.

  14. “Totas Euroservices Ltd”? What’s that all about? I presumed JGPL was formed anew rather than being EJR, but what the heck is that?”

    It was possibly just a shelf name chosen at random by a company registration agent. In the old days it was quicker to transfer ownership of a shelf company than to form a brand new entity.

    These days I can incoporate a company with a new name and the proper directors etc. within about 4 hours.

    Please note, other incorporaion agents are available 😉

  15. What makes me think is the byline given to the story; Christian Sylt and Caroline Reid. Now, both are accredited with “Formula Money”, something that I have been trying to lay my hands on.

    Recent reports have suggested that Mallya is confident that their entry inevitable.

    Are Sylt and Reid credibile, in that context, to deduce such a likelihood or is it that the editors at Telegraph have twisted the headline and the implicitly of the final submission by the two authors?

    I am confused.

    1. I treat all figures about F1 with enormous caution. My view is that getting such things is something that requires years and years of experience and close contact with the important people. And trust. Trust is the key. One can get this stuff if people trust you,. In order to trsut you they must know you. I do not see either of the people mentioned at ANY races. However, I believe they think very highly of themselves.

  16. A registration number is the fingerprint of a company. A limited company can change name as often as it wishes, much like an invididual could change a name by deed poll. However, it can never change it’s ‘fingerprint’.

    2417588 is holder of the F1 entry and is the company in the original news reports. It was originally formed as Totas Euroservices Ltd which was possibly a shelf name used prior to it being sold by the incorporating agent. Over the years it has gone through five further name changes (see my post above). Throughout all those names, the company registration number remained 2417588 as Joe has explained.

    The reasons for not filing those accounts is a matter for speculation. As Stephen Kellett suggests in his post, they could be perfectly innocent. Shit happens as they say. Their fine currently stands at £750.

    However, companies who are dealing with a ‘late filer’ can get a bit jittery, especially if they are owed money.

    Despite my original post about the seriousness of the situation, I would be very surprised if it were struck off as it is clearly trading.

  17. I work for an F1 team, and my wife works for a sub contract company who used to supply Force India. They never paid on time, and have sent several companies to the wall through their arrogance. Although it would be sad for their employee’s, for the management who sent smaller companies to the wall it would be a great justice to see them not race. You assume because they are in F1 they are just and noble. Perhaps a look at the real picture of people who have lost everything might make you think again… or maybe not

    1. name withheld,

      I am sorry to hear that. They do have a bad reputation but my feeling is that the staff want to pay the bills but that the top management is the problem. He was born rich I guess and seems to think that he can do as he pleases. He will probably end up wasting the vast family fortune. Second generation wealth… I know that is no consolation but he cannot go on wasting money that Daddy made for ever…

  18. For LeighJW

    thanks for identifying the reg. for the team entrant.

    Note on objections to gazetting, in practise, CH permit directors to lodge objections, leaving a long and self – serving gap possible whilst action is suspended, until, long long after, someone in compliance (still a team of 5?) goes and reviews and gets the offending company struck. Worst case i’ve seen: 7 years active between 1st gazette and strike with no accts.!

    Here’s some lowdown:

    Legal Form Private Limited
    Registration Number 02417588
    VAT Number GB581078138
    Subject Status Unknown
    Date of Incorporation 29/08/1989

    The following information was obtained from Companies House daily Gazette dated 20/01/2010 : First notice from Companies House to dissolve company in 3 months

    31/10/2007 : Change of name from SPYKER F1 TEAM LIMITED.

    24/10/2006 : Change of name from SPYKER MF1 TEAM LIMITED.

    9/10/2006 : Change of name from MIDLAND F1 RACING LIMITED.

    9/11/2005 : Change of name from JORDAN GRAND PRIX LIMITED.

    22/11/1995 : The Registered Office address changed from 11 ST SAVIOURS WHARF, MILL STREET, LONDON, SE.

    15/06/1992 : The Registered Office address changed from 27 CHANCERY LANE, LONDON, WC2A 1NE, WC2A 1NE.

    4/08/1991 : The Registered Office address changed from 27 CHANCERY LANE, LONDON, WC2A 1NE, WC2A 1NE.

    14/06/1990 : Change of name from TOTAS EUROSERVICES LIMITED.

    8/06/1990 : The Registered Office address changed from 844 HIGH ROAD, LEYTON, LONDON, E10 6AE, E10 6.
    Date of Last Annual Return to Registry 29/08/2009
    Accounts The last filed accounts at Companies House are those to 31/12/2007
    Accounting Reference Date 31/12

    Activities The management and promotion of a Formula One race team, and the design, development and manufacture of Formula One race cars.
    Nace Code 9262
    Premises Leased,Offices,Factory
    Staff Employed 254
    Trade Names JORDAN F1
    Product Names JORDAN
    Import Countries ALL OVER THE WORLD
    Export Countries No Export Activity
    Sort Code 609389
    Auditors Grant Thornton UK LLP

    Summary of CCJ’s/Scottish Decrees
    Period Last 72 Months Last 36 Months
    Amount Summary 147,956 799
    Count Summary 15 2
    Unsettled Amount Summary 25,200 799
    Highest Amount Summary 72,350 729
    Details of the most recent CCJ’s/Scottish Decrees
    Date Amount Type Case No Satisfied Court
    04/09/2007 729 Judgment 7QT27072 NORTHAMPTON CCBC
    13/08/2007 70 Judgment 7WJ82834 WALSALL
    10/05/2006 461 Judgment 6WJ81491 WALSALL
    21/03/2006 1,418 Judgment 6NG02775 NOTTINGHAM
    08/09/2005 21,557 Judgment 5NN02979 NORTHAMPTON
    22/07/2005 127 Judgment 5QZ30511 19/09/2005 NORTHAMPTON CCBC
    15/07/2005 525 Judgment 5QZ30494 NORTHAMPTON CCBC
    14/07/2005 252 Judgment 5JS66693 BRENTFORD
    16/06/2005 72,350 Judgment 5HH00667 10/08/2005 HAYWARDS HEATH
    15/06/2005 7,049 Judgment 5XF81074 19/07/2005 NORTHAMPTON CCBC
    16/05/2005 188 Decree SA265/05 DUNDEE
    13/05/2005 35,707 Judgment 5HH00040 15/06/2005 HAYWARDS HEATH
    19/04/2005 7,237 Judgment 5ST00680 26/05/2005 STAFFORD
    01/02/2005 164 Judgment 5BU00033 24/05/2005 BURY
    12/11/2004 122 Judgment 4MY04566 16/12/2004 MAYORS & CITY

    Summary of Mortgages, Charges and Satisfactions
    Total Number of Mortgages/Charges Registered 14
    Number Outstanding 6
    Number Partially Satisfied 0
    Number Satisfied 8

  19. Had to split up posts, and cull the data, for some attempt at clarity:

    1. all CCJs appear to antecede Force India’s bit of this history, and are small in real terms. They’re not settled, but presumably long forgotten by creditors, though theoretically enforceable they’re not going to sink the ship.

    2. don’t know about you, but personally i think Grant Thornton are sharks, though that could apply to any large firm.

    3. (2) as opinion notwithstanding, it’s not like their auditors lack resources to clean up a company of this size.

    4. trade creditors end fiscal ’07 stood at £13,831,000, and operating loss ~ £10M

    5. and more interestingly, working capital attributed as owed to group companies is (fiscal end ’07) noted as £48,000,000

    so, if the company is defined for accounting purposes as a group, there’s a lot of work required to understand what’s going on, beyond what i’m inclined to tackle just now.

    What i don’t get, is, with the raw data being readily available, why no-one has bothered to look at the numbers?

    I’d guess the group categorisation is because of close holdings, and that money is being funneled from one close company to another, so that one of the entities can get a tax write – off. That’d be – at a guess – a write off applied against the separated “brand company” income. Now, that’s not very arms – length, and rather frowned on in these difficult financial days.

    Sorry if short-hand has made what i add at least as impenenentrable as all that’s gone before, but my guess is there’s at minimum a financing log-jam happening somwehere in the company structure, possibly because of poorly constructed tax – advantageous structures, and it needs a proper flush through with cold hard cash to get things flowing again. Either that, or we truly have an inheritor to the Walkinshaw legal legacy . . .

  20. for Joe Saward:

    “If money is outstanding presumably someone will be asking for it. And that person has the right to get a winding up order if he is not paid.”

    True, but not included in the data above is the full list of charges and debentures this company has entered into.

    If you are owed money by a company but by winding it up you find it has no lien on actual assets, because they are collateral for other loans (whether inter – group or true arms – length / external liens) and you have to go through lengthy court proceedings to wind up a group, is it worth it? The biggest claim i see above is about 77k, barely what you’d put on account for a modest chambers to even start such a proceeding.

    All shares of the entrant co. are owned by Force India Formula One Ltd, ultimate parent is Orange India Holdings SARL, in Luxembourg . . .

    all i can say is that company structure done well, works well. But this seems to be a tangled mess.

    Sylt and Reid’s reporting (and grasp of accounting) is abysmally poor. I’d say the sub-ed rushed and chopped their actual draft, but Sylt’s output elsewhere where he has editorial control is not much better.

  21. Just catching up on all the confusion with the new teams, and wondering again why e.g. ProDrive were given the boot.

    Only rational reason i can think of is BE wants the cat amongst the pidgeons during the most difficult period for his relationship with CVC and the FIA. With the FIA potentially under attack on governance issues, this could be perceived as a medium term threat to the validity of the original FOM license.

    I’m not saying BE is being his habitual Machiavelli for nefarious ends. I am inclined to think the contrary: that at 80, he has an exit plan to stamp his final mark on the sport structure, and allowing last time there was so much upheaval Bernie took Ballestre / FISA to the cleaners, i imagine he reckons he can make any impact he has now stick for a good while. What better way to distance yourself from Max, who despite being an admirable legal mind, effectively erased any positive memory of his involvement. That’s a difference any partner in a long standing symbiotic relationship desires greatly. On that last point, i speak from experience – it has nothing to do with personal fallings out, you still want to make your mark if you’re the survivor.

    Incidentally, i think the financial analysis is being done about – face. I think it’d be more productive to dive into FOM related companies to look for bridging loans to team companies. The only obstacle – there do exist agenecies who can track a lot of obscure offshore business – is cost. Given the cost of “Formula Money” you’d think they could budget for this. Something tells me they don’t. (sorry, enough digs about Sylt, it’s just a “drink deep or not at all” problem)

    Incidentally, just where does BE get [sic] “the Serbian government said they’ll pay?” Aren’t they still bound by fiscal responsibility rules following UN/OSCE accords? Bernie backing the black cat, i guess 🙂

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