VAT mistakes sees HMRC tax investigation at JJB Sports
Wrongly added VAT to sales of children’s clothing puts JJB Sports under investigation by the taxman
STRUGGLING SPORTSWEAR retailer JJB Sports is reported to be under investigation by HMRC over accounting errors relating to VAT mistakes.
The taxman has been looking into allegations the company wrongly charged VAT on children’s clothing which is usually zero-rated, dating back as far as 2006, The Telegraph reports.
At the end of August, the struggling company said that it was in discussions with its strategic partners to discuss a sales process with Sports Direct, the most likely buyer after rival JD Sports said it was uninterested.
On 28 August, net bank debt was £16.5m, with JJB also owing £18.75m of convertible loan notes. It had drawn down £1.1m under the trade loan facility.
In the summer of last year, KPMG arranged an insolvency deal known as a Company Voluntary Arrangement (CVA) which reduces debt owed and contracts repayment terms over an agreed period of time. In order for a CVA to be approved, 75% of creditors, by value, must approve the deal.
