Comet crash leaves debt trail

Although the report from the retailers’ administrator Deloitte has yet to be officially released, it has been suggested that taxpayers could fork out around £50 million for Comet’s failure to raise sufficient funds incurred from winding down the chain.

This includes paying up to around £24 million in redundancy payments to 6,000 staff. The report indicates that this will mean the government could be forced to step in and ensure workers receive their payments.

Despite being owed £26.1 million, there is a chance Comet will pay nothing to HMRC.

Comet’s secured creditors, such as the backers of parent company Hailey Acquisitions, will get payments of just under £50 million, but it has been suggested by the Sunday Telegraph that they too will miss out on what they are owed with a shortfall of £95 million.  

ITV and Google are both waiting for £1.2 million and £602,000 in unpaid advertising, respectively.

Clive Longbottom, Co-Founder and Service Director at Quocirca, said the way Comet was conducting its business wasn’t anything unusual.

“In the past, the HMRC always came first, no matter what,” Longbottom said. “The law was changed so that secured creditors come higher up the pecking list.  Therefore, as Comet owes HMRC for VAT and possibly some corporation tax, the money won’t get paid to HMRC. A small percentage may do, but not all of it.”  

In a way, he said, this meant that the tax payer was paying. However, this was the same case for any company that goes bust, no matter its size, if it did not have enough to cover all debts.

“It would be interesting to see how much tax is lost this way through all failures in business – and compare this to the fees received by the administrators, who somehow always seem to be paid the full going rate,” he added.