Honest Burgers has found itself embroiled in a disagreement with HM Revenue & Customs. The core of the matter lies in the burger chain's request for an extension on a tax bill, a request that, unfortunately, was not granted. Despite efforts to negotiate a "time to pay" arrangement, Honest Burgers faced a winding-up petition from the tax authorities, a move that took the company's management by surprise due to its swift nature. Remarkably, the company, which employs approximately 700 individuals, was able to settle the outstanding tax bill promptly last week.
Andy Li, CC0, via Wikimedia Commons
This scenario sheds light on a larger trend observed among business leaders: the taxman's increasingly stringent stance on "time to pay" arrangements. These arrangements were crucial during the pandemic, offering businesses breathing room to manage their tax liabilities without the threat of bankruptcy. Honest Burgers' journey from a modest pop-up in Brixton in 2011 to a formidable presence with 40 outlets, primarily in London and the southeast, illustrates the chain's remarkable growth. Honest Burgers is backed by Active Partners, a private equity firm with a portfolio that includes names like Soho House and Leon.
In an effort to renegotiate the payment terms with HMRC, Honest Burgers enlisted financial advisors. However, their efforts were in vain, as HMRC declined the proposal. Honest Burgers believed that legal proceedings would take six weeks to initiate. Yet, a petition was filed in court in less than a week, as stated by a spokesperson for Honest Burgers. The spokesperson humorously noted that if the company could match the speed of HMRC in delivering petitions, their sales growth, already at an impressive 20%, could soar even higher.
HMRC, on the other hand, maintains its position. A spokesperson stated, "We take a supportive approach to dealing with customers who have tax debts and only file winding-up petitions once we've exhausted all other options, in order to protect taxpayers' money."
What are your thoughts on this situation? Honest Burgers' rapid response to the tax dilemma is noteworthy, but do you think the tax authorities could have been more lenient? Share your views in the comments below.