Matalan tycoon with big tax bill seeks state loan
THE super-rich owner of the Matalan clothing chain has been slammed after applying for a taxpayer-backed loan – at the same time as he’s being chased by HMRC over an £84million tax bill.
John Hargreaves, who lives in tax haven Monaco, has revealed in a statement to his company’s lenders that Matalan expects to access £25million under the Coronavirus Large Business Interruption Loan Scheme (CLBILS), which is guaranteed by the Treasury.
The Merseyside-based firm has complained it has never ‘faced such difficult and unpredictable times’ in 35 years of trading and that ‘along with a significant number of businesses we have been seriously impacted by Covid-19’.
The family-owned firm has already furloughed 11,000 staff under the Government Coronavirus Job Retention Scheme, which the company estimates would save it £21million over an eight-and-ahalf-week period. Matalan has also been given a 12-month holiday from paying business rates, which represents a saving of £44million.
Yet The Mail on Sunday revealed last month that the taxman was still chasing Hargreaves for money it claims he owes. It emerged a year ago that the courts had awarded Hargreaves victory in a battle with HMRC over the £84million tax bill, which relates to a £237 million share windfall he received from his firm in 2002. The authorities are appealing the case.
Last night, tax campaigner and Labour MP Dame Margaret Hodge, also formerly chair of the public accounts committee, said: ‘It does make me cross. It’s unbelievable.
‘No taxpayer would believe that the money they’ve worked hard to earn and that they dutifully pay in tax is being used to subsidise an individual or a company that deliberately arranges their financial affairs for no other purpose than to avoid tax. This man has avoided paying millions in tax and has now got the gall to do this.’
She said she did not support withholding Government aid, adding: ‘We don’t want to damage the economy and [we want to] protect the staff. But I would do this subject to conditionality. What I would do is ask for an equity share so we can get some of the support money back for the taxpayers at some point.’
In 2010 Hargreaves paid himself a £250 million dividend after refinancing the firm with around £525million of debt from bondholders.
It also emerged earlier this month Hargreaves is suing his adviser PwC over claims it gave him bad advice before he relocated to Monaco 20 years ago and what he needed to do to avoid paying taxes.
Matalan sources said he separately paid £35 million in tax during 2018 and his chain normally contributes £150million a year in business and employee taxes.
The £25million taxpayer-backed loan is part of a £50million financing plan the company has to navigate the crisis. Matalan is proposing to raise the other £25million using loans from its bondholders. It needs approval from its bondholders by 5pm on Wednesday.
Companies borrowing more than £50 million through the CLBILS are prohibited from paying dividends and bumper bonuses.
A Treasury spokesman said: ‘These loans are targeted to all viable large businesses as part of our action to support jobs and the economy. We have always been clear that these Government-backed loans are repayable and not grants.’
George Turner, director at think tank TaxWatch, said: ‘It is right that businesses and employees hit by the outbreak receive support. But, as we saw with Virgin Atlantic, the Government refusing to grant a loan can force tax exile business owners to put their hands in their own pockets. Something that a lot of people would expect Mr Hargreaves to be doing now.’