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Fri 31st Jan 2014 - Breaking News - Administrator - Inc Group VAT and PAYE under-declared
Administrator - Inc Group VAT and PAYE under-declared: The administrator of Greenwich area operator Inc Group, led by Frank Dowling, has reported VAT under-declaration – and the transfer of leases despite warnings that the company was insolvent. The administrator stated: “In June 2012, Frank Dowling, as director of Greenwich Inc Trading, sought the advice of an insolvency practitioner. The advice received was that Greenwich Inc was insolvent and should be placed in creditors’ voluntary liquidation. Notwithstanding the advice, Greenwich Inc continued to trade for over 12 months and, at the same time, a number of companies were incorporated in Scotland with the intention that these new companies would acquire the trading businesses. Further companies appear to have been formed into which the leases owned by the companies were to be transferred. The trading businesses were transferred from Greenwich Inc into the Scottish companies incorporated to run each site and no consideration appears to have been paid to Greenwich Inc in respect of goodwill, stock and money on site in the form of takings and floats. Following this transfer a meeting of creditors was called to place Greenwich Inc into creditors’ voluntary liquidation. Mr Dowling failed to attend the meeting so on 17 October 2013 Royal Borough of Greenwich presented a winding up petition against Greenwich Inc. Mr Dowling asserted that HMRC was owed nothing for VAT as Greenwich Inc Trading was part of a group registration. The demands were made on another associated company, Greenwich Inc Holdings, and that was PAYE was £147,999. Once the provisional liquidator of Greenwich Inc Trading reviewed the accounting records it was apparent the (company) owed HMRC £3,920,502 in VAT and £2,108,696 in PAYE. The books and records meticulously recorded all PAYE deductions and VAT matters, but it appears no attempt was made to provide this information to HMRC. Instead, there appears to have been a significant under-declaration of VAT in the periods until September 2012 and after than no VAT returns were submitted – this is despite a firm of accountants being instructed to ascertain the true position, working on the accounts for seven months and invoicing around £60,000 and receiving £27,000. Similarly, despite calculating the amount deducted in PAYE on a monthly basis, minimal payments were made to HMRC and no P35s were submitted for the tax years 2011-12 or 2012-13.” The administrator noted that trading companies “appeared to have been transferred to a number of special purpose vehicle without any consideration being paid to Greenwich Inc Trading Limited”. The administrator added: “The joint administrator was advised that Frank Dowling and others involved in the running of Greenwich Inc had been arrested by HMRC.” The administrator reported that each of the company’s sites had been cleared of cash (and a number of items previously on display) when Licensed Solutions attended them post-administration. It also “transpired that no staff had been paid for the work they had done in November, a situation they were not unaccustomed to”. Fleurets’ Martin Willis has told the administrator that the lease on The Madison, St Paul’s is worth in the region of £4 to £5 million. The lease of the American Sports and Grill and Union Square in the 02 Arena expires in April this year – the administrator reports that Dowling originally took out a loan of £6m to furnish these two sites. The administrators have also discovered that the company has a 25-year lease on a Gresham Street property, which is being valued. Trading company sites have turned over £870,146 since 29 November 2013, producing a net profit of £187,098. Unsecured creditors are estimated to be owed £15,109,000. A meeting of creditors takes place on 7 February. Dowling, 44, was born in the United States and moved to the UK in 1997. He bought his first site, Bar du Musee in Greenwich, in 2002, secured the O2 Arena’s first restaurant tenancy in 2007. The following year he acquired the Elbow Room pool bar chain. At its height, Inc Group ran 24 sites, had a turnover of £20m a year and employed 400 people. In March this year, Inc Group was fined almost £20,000 after health inspectors found mouse droppings in the kitchen and raw sewage in sinks at one of its sites, The Trafalgar Tavern in Greenwich.
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