SHEIKH GULZAR: The debt gets personal
Sheikh Abid Gulzar, recent controversial buyer of Hastings Pier, told HIP in an interview which we published last month (Issue 106) that he was spending his own ‘good hard-earned money’. When our interviewer pointed out that two of the companies of which he was sole director had gone into liquidation in January 2017 owing hundreds of thousands of pounds to creditors, he excused himself by stating that he had also lost a substantial amount of personal money. ‘If I show profit, that means I’m not investing’, he boasted.
What Mr Gulzar did not reveal is that Her Majesty’s Revenue & Customs have been taking a less generous attitude to over £144,000 worth of tax debts incurred by him while trading as unincorporated sole proprietor of Eastbourne hotels Boship Lions and Albany Lions and to similar debts of over £260,000 run up by a company Lions Hotels Limited of which he was sole director prior to its liquidation in January 2017.
These debts did not arise from a failure of Mr Gulzar to meet his own income tax or other personal tax liabilities. They represented deductions which he either made or should have made, by way of PAYE and National Insurance contributions (NIC) from wages paid to staff, but failed to hand over to HMRC ; and, in the case of VAT, presumably from failure to account to HMRC for tax charged to and paid by the hotels’ customers.
Powers of HMRC
Businessmen like Mr Gulzar may sometimes consider that the tax man should be kept at the back of the queue when cash is in short supply. But, unsurprisingly, HMRC take the opposite view – and they have powers which poor unsecured creditors do not. Where there has been what they regard as ‘serious non-compliance’ in handing tax over, and there appears to be a serious risk of future non-payment, they get tough. On 1 March 2017 they served Mr Gulzar with a notice requiring him to give security in respect of his ongoing businesses: the two companies Boship Farm Hotel Limited and Albany Lions Hotel Limited, which had taken over the respective unincorporated businesses since the debts had been incurred, plus Mansion Lions Hotels Limited, another company of which he was sole director which had taken over the business of Lions Hotel Limited.
Mr Gulzar also by that time owed over £16,500 in PAYE and NIC as sole proprietor of the Lions Cub Nursery, and over £135,000 in VAT (including interest and penalties for non-payment) as partner of the Lions Group Shop. Another company of his, Chatsworth Hotels Limited, had gone into liquidation owing over £39,000 in PAYE, while another existing company Lions Pier Limited owed over £46,000.
It is difficult to imagine a clearer case to justify HMRC taking protective action to secure collection of future tax revenue, and they duly demanded advance payments representing four months average PAYE and NIC payments for each ongoing business. However it didn’t suit Mr Gulzar to pay up. He appealed against HMRC’s rulings to the First-tier Tribunal Tax Chamber.
The case was eventually listed before Judge Philip Gillett at a hearing in Brighton on 24 May this year. Mr Gulzar, who must at that point have been in serious negotiation with the administrators of Hastings Pier Charity for prospective purchase of the pier, clearly wasn’t keen to have it determined then. According to the Judge’s Decision, which was released only two months later on 23 July, Mr Gulzar contacted the court in advance to request an adjournment on the grounds that – ‘(1) he had six broken ribs; (2) he thought a member of his office was attending; and (3) he thought the hearing was the following week.’
The judge proceeded to hear the appeal in his absence and dismissed it.
It is not clear what sums are now owed personally by Mr Gulzar, what by his companies, and how quickly HMRC will move to enforce payment. In his appeal document dated June 2017 he argued that payments in excess of £216,000 had already been paid towards the personal tax debts and that his existing companies were not in any arrears. The court did not investigate whether these claims were true, since it was essentially only concerned with the position as at 1 March 2017. However time may tell quite quickly: HMRC don’t usually hang about when they’ve established that there is tax revenue due to them in PAYE, NIC or VAT.
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