A COLLAPSED law firm linked to a former SNP MP went bust owing creditors more than £600,000, including £210,000 to the taxman, it has emerged.

Glasgow firm Hamilton Burns WS Ltd went into administration last month with the loss of nine jobs because of a steep drop in its legal aid income and “very high levels of historic debt”.

The firm was formerly run by Tasmina Ahmed-Sheikh, a member of the SNP’s ruling national executive, who lost her Ochil and South Perthshire seat at the General Election.

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A former Tory who defected to the SNP in 2000 as a protegee of Alex Salmond, she was defeated by Tory Luke Graham.

She quit Hamilton Burns after being elected in 2015, but continued to declare a shareholding in her Commons register of interest and was last year the subject of a sequestration action by HM Revenue and Customs in relation to the firm.

The action was dismissed “in chambers” on the eve of a scheduled hearing in open court and she insisted at the time she had no “outstanding personal tax liability whatsoever”.

The administrators for Hamilton Burns, FRP Advisory LLP, have now issued a statement of proposals to creditors setting out the history of the collapse on May 23, the firm’s assets and liabilities.

It reports the company owed creditors around £638,000, including £210,400 due to HMRC, £11,000 to Glasgow City Council for business rates and more than £6,000 to Npower. 

Set against assets of around £127,000, it meant a net “deficiency” of £511,000. However, the report suggests it could have been worse if HMRC had pressed harder.

It states: “HMRC are pursuing sums totalling £388,000 for arrears of VAT, PAYE and NIC which the company is unable to settle.

Following discussions with the proposed administrators, HMRC agreed to withdraw its petition to enable the administration to proceed.

The directors have attempted to repay these debts; however, with falling turnover levels there is insufficient cash to meet these.”

The legacy partnership was set up in 2001 after the demise of firm Hamilton Burns & Moore. 

According to her online CV, Ms Ahmed-Sheikh, 46, was a salaried partner in Hamilton Burns from 2005 to 2010, then an equity partner from 2010 to 2015.

After Hamilton Burns was dissolved, the SNP said Ms Ahmed-Sheikh, the party’s former trade spokeswoman at Westminster, was “sorry to hear the news”, but had not been involved for two years and had only a “very small shareholding” in it.

The firm’s administration followed a request by the current directors of the company, after it was unable to resolve its financial problems.

Nine staff, two qualified lawyers and seven administrative workers, were made redundant. 

Last month, the law firm’s joint administrators Tom MacLennan and Iain Fraser, partners with FRP Advisory, said: “Every effort had been made to find a solution for the firm. However, it became clear that administration was the only option.

“We are pleased to have negotiated agreements for the transfer of seven staff, client files and work in progress. It is with great regret that the remaining nine staff have been made redundant."

Ms Ahmed-Sheikh remains on the roll of solicitors at the Law Society, but is not thought to hold a practising certificate.

At the election, her 10,168 majority was wiped out, with Mr Graham winning by 3,359 votes.