Manchester company wound up after business rates avoidance investigation
PAG Management Services, a company that operated a business rates mitigation scheme for clients, has been wound-up after it withdrew an appeal to close the business in the public interest.
During the 18-month period to March 2013, the Manchester-based company sheltered property owners from business rates totalling £6.4m and generated fee income of £1.8m from its clients.
The scheme continued to expand so that by March 2015 business rates being avoided by the scheme were estimated to be in the region of £12m per year, an investigation by the Insolvency Service found.
PAG Management Services, a company that operated a business rates mitigation scheme for clients, has been wound-up after it withdrew an appeal to close the business in the public interest.
During the 18-month period to March 2013, the Manchester-based company sheltered property owners from business rates totalling £6.4m and generated fee income of £1.8m from its clients.
The scheme continued to expand so that by March 2015 business rates being avoided by the scheme were estimated to be in the region of £12m per year, an investigation by the Insolvency Service found.
PAG Management Services, a sister company of developer Property Alliance Group, set up special-purpose vehicles such as Ashburton Solutions and Beacon Property Solutions. Each SPV would sign a number of leases, typically 20, relating to empty commercial properties.
Each lease was for a nominal rent and contained a clause that enabled the property owner to terminate the lease on seven days’ notice. Immediately after signing the leases, the special vehicle company would be placed into members’ voluntary liquidation with the result that the properties leased to the special vehicle company became exempt from business rates otherwise payable.
PAGMSL was ordered by the High Court on 9 October to wind up after it was found to have operated a scheme that relied on an abuse of insolvency legislation.
The order was suspended after pending an appeal lodged by the company, but that appeal was formally dismissed on 15 November at the company’s request.
Two associated companies, complicit in the operation of the scheme, Ashburton Solutions and Beacon Property Solutions, were also wound up in the public interest.
A PAGMSL spokesman said: “We withdrew our appeal after reaching an agreement with the Secretary of State.
“The basis for withdrawing the appeal was that the scheme in question had not been marketed since early 2014 and no longer operates.
“In withdrawing the appeal, PAGMSL made it clear it did not accept the judge’s decision as to the basis for ordering the winding up of the company.”
He also said the appeal had been withdrawn for “pragmatic reasons” and the company had “paid all costs due to the Secretary of State.”
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