JAG Communications cuts 80 jobs in VAT fight

JAG Communications cuts 80 jobs in VAT fight

JAG Communications has staved off collapse by making 80 redundancies, after HMRC originally asked it to pay a £1.6m VAT deposit.

The south-west based retailer managed to negotiate a reduction to £600,000, but claimed it has been forced to make the 80 job cuts across its 75 stores and head office as a result. Seven of the cuts were from its head office.

JAG also claimed to have an unpaid bill of £350,000 owed from O2, which it said had been exacerbated by O2’s revenue share scheme.

Problems at JAG originally arose when its bank, Lloyds TSB, withdrew the company’s £2m overdraft, preventing it from paying its liabilities.

The dispute with HMRC stems from JAG avoiding collapse in February 2009 when it had a £2m VAT bill that it couldn’t pay.

JAG CEO John George moved the retailer’s assets into a new holding company, while pushing the old business into administration, to allow it to continue trading, known as a ‘prepack administration’.

However, the unrecovered VAT has led to HMRC demanding the £1.6m deposit to the new company, which was challenged by George and successfully reduced
to £600,000.

George (pictured) said he is attempting to mollify HMRC by promising to pay the VAT bill in monthly instalments of £150,000 instead of the prior quarterly arrangement, and claimed to have offered to pay VAT up front.

He said: ‘Fundamentally, 80 people are out of a job because of VAT. We are not in buoyant times and I have to assume things aren’t getting any better.’

The unpaid sum from O2 had arisen after JAG moved its business to a different holding company, according to George.

The company has also had to close down 12 stores in recent weeks, asking managers to take on the stores as franchises.

Written by Mobile Today
Mobile Today

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