Unexpected problems

The taxpayer company’s business was mainly photographic work for high street retailers. It began a project for TR Lewin in November 2011. The main part was due to start in February 2012 but it was postponed to May and then cancelled.

The situation was a setback for the taxpayer which taken on extra employees who had to be paid in spite of doing no work.

The taxpayer’s bank then decided to change arrangements. It reduced the company’s overdraft from £125 000 to £90 000 and demanding monthly repayments of £10 000.

The firm was unable to comply leading the bank to cancel the overdraft facility and impose a monthly payment of £5 550.

The taxpayer was forced sell its premises to repay the bank and had to trade without outside finance all the while remaining responsible for PAYE.

Financial problems meant the company was late making...