AABRS had advised a licensed Indian restaurant and takeaway, based in Hampshire.
The company had one director and two shareholders and operating from two trading locations under two different trading styles.
Both the restaurants had been established for many years. The leasehold were owned by connected parties and the company occupied the premises on an informal basis at annual rent of £14,000 and £30,000 per annum.
Both restaurants offered traditional Indian cuisine one was able to accommodate a maximum of 82 covers at one sitting, whilst the slightly smaller could accommodate up to 52 covers at any one time.
At the year-end 31 August 2013 the company turnover was in the region of £600,000 with a profit of approximately £10,000.
Regrettably the company felt the pinch on turnover mainly due to the poor economic conditions and recently sales were impacted as new restaurants opened within the area offering similar cuisine at set prices or discounted meals.
The company’s problems were compounded when HM Revenue and Customs commenced an investigation into the company’s affairs, which revealed an oversight in the manner in which the company was accounting for VAT and this had gone unnoticed for a number of years. As a consequence the Revenue raised further assessments of circa £55,450.00.
As the investigation continued the directors through the company accountant, made an initial offer of £30,000 which was rejected. Moreover the company received notification from HM Revenue and Customs that unless full payment was received in respect of the outstanding liabilities, a Petition for the Compulsory Winding Up of the company would be presented.
In a final effort to settle the matter the director made a second offer of £50,000. However, due to the substantial Crown liabilities that had accrued during the intervening period, the offer was also refused.
With no means with which to clear the Crown liabilities the director was left with no option other than to cease trading and seek the advice of AABRS.
The two restaurants were valued by an independent form of asset agent who marketed the businesses for sale.