Honest Burger CEO Frank Hayes has suggested HMRC may have been overzealous in slapping the business with a winding up order after becoming aware it had raised cash via crowdfunding.
The burger restaurant group raised £3m in October to fund growth including development of its new Smashed concept.
Over the weekend, it was reported the business had been hit with a winding up order by HM Revenue & Customs after negotiations to agree a ‘time to pay’ agreement collapsed.
Hayes said the business had been negotiating to pay the tax in good faith, and had already secured a working capital facility to settle the amount, which has since been paid.
While he did not accuse the taxman of any malice, he suggested a disconnect arose after talks reached the end of the line, and HMRC made reassurances the business had six weeks to make a payment – only to hit the restaurant group with a winding up order without warning a few days later.
“It’s not particularly sympathetic, when you think of all the cost challenges businesses are under,” Hayes told MCA.
“But I think part of the dynamic here, quite honestly, is they knew about the crowd raise. So from their perspective they’re going, we’ll have some of that, and not particularly caring that that was raised on a different premise.”
Hayes emphasised it was not the case that funds from the crowd raise would be used to pay down the debt.
The negotiations with HMRC were described as a drawn-out process, with Honest appointing an external advisor to agree a settlement and payment plan for the tax, which Hayes acknowledged left the business a “little removed” from the process.
HMRC is increasingly petitioning courts to wind up companies as they chase money they are owed.
The number of petition applications from the tax authority was 1,522 this year compared with 351 last year, according to figures from Company Watch.
The taxman was restricted from doing so until the end of March 2022 by Covid-era legislation designed to protect companies affected by the lockdowns.
