UK sale to fight off winding up order

REVENUE & Customs' hardline approach to unpaid taxes reared its head yesterday when vehicle tracking firm Minorplanet Systems' revealed its UK arm has been issued a winding up petition to claw back about £2m.

The Leeds company has been forced to appoint advisers to sell its UK division, Minorplanet Ltd, to pay the debt.

HMRC is also understood to have played a significant role in the demise of another Yorkshire firm, Jarvis, which was last month forced into administration.

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Minorplanet, which uses satellite tracking to help companies cut vehicle fleets' emissions and fuel consumption, fell 7.2m into the red last year after demand from small to medium-sized businesses slumped.

Its UK arm accounts for about 40 per cent of the group's turnover, but has fallen significantly behind with tax payments. In February the group appeared to have won breathing space from HMRC when it said it had agreed a 12-month payment schedule.

However, chief executive Terry Donovan said Minorplanet's recent attempts to repay the debt and have the petition removed were rejected.

"I'm not here to blame HMRC because we didn't quite keep up with them," he said. "We didn't entirely keep up with all of the current debt payments because trading has been difficult, but actually it's getting stronger."

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The company is close to selling its Australian subsidiary, Minorplanet Asia Pacific Pty Ltd, and hoped this would help appease HMRC. Mr Donovan said the group also set aside 300,000 in a solicitor's account, and sent HMRC documents relating to the imminent Australian sale, from which it hoped to pay the taxman another 400,000. However, he said this compromise was rejected by HMRC. A court hearing has been set for May 5.

"That would have reduced our debt by about 50 per cent and we had a payment solution for the rest," he said. "At the end of the day we offered that we would get their debt completely up to date.

"Maybe they felt we let them down."

York-based rail maintenance firm Jarvis was last month forced into administration by its banks. Reports claimed Jarvis's lenders felt they had no choice but to put the company into administration because they believed other creditors, including HMRC, were set to call in debts and force it into insolvency.

Mr Donovan, who holds 12.7 per cent of the company's shares, said he is in advanced talks about selling the UK arm. However, he said the future of the plc remains uncertain, and a number of options are under consideration such as selling the whole group, or selling assets and customers.

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"I'm pretty confident that there can be a viable solution for it," said Mr Donovan. "I have a responsibility to my shareholders, creditors and staff to make sure there's a potential continuing business.

"Naturally it's been very frustrating. But my job is to solve this problem."

A HMRC spokeswoman declined to comment on individual cases. She said: "HMRC does not take the decision to petition to wind up a company on the grounds of insolvency lightly.

"HMRC remains absolutely committed to demonstrating a sympathetic approach to businesses that have genuine short-term difficulties in paying the tax they owe.

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"However, there is little HMRC can do for a business whose viability is dependent on not paying the UK taxes to which they are liable, or on special treatment not available to other customers with similar tax affairs."

The key dates

1996 – Minorplanet is founded.

1997 – Minorplanet floats on the London Stock Exchange.

May 2008 – Rejects a takeover offer as undervaluing the company.

December 2008 – Makes pre-tax profits of 1.5m.

August 2009 – Says it hopes to raise 3.25m through a placing and open offer.

September 2009 – Raises just 1.6m through a placing, open offer and new loans.

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February 2010 – Chief executive Terry Donovan lends Minorplanet 300,000 to help with working capital.

February 2010 – Reports 7.2m loss and says it has agreed a 12-month schedule to pay HMRC 2.1m in taxes.

April 2010 – Reveals winding-up petition by HMRC against its UK trading arm, to claw back 2m.

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