HM Revenue & Customs is “highly unlikely” to be paid the £10.5m it is owed in VAT and other taxes by Tuffnells Parcels Express, according to its administrator.
In a report to creditors of the collapsed parcel firm, Interpath also said that staff owed an estimated £620,000 in wages, holiday pay and pension benefits, and unsecured creditors owed an estimated £12.3m, are all unlikely to receive a dividend either.
Tuffnells entered administration on 12 June with more than 2,000 staff made immediately redundant, following what Interpath described as “a period of reduced profitability and increasing cash flow pressures”.
Joint administrator Richard Harrison said: “In recent history, the company has struggled with cost base inflation and an inability to pass this cost onto customers.
“Despite recent positive steps taken in a solvent turnaround (time-to-pay achieved with HMRC, price rises put through with customers) the company’s performance failed to meet forecast expectations resulting in a funding requirement in excess of available facilities.”
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The report said in the year ending 31 December 2021, Tuffnells reported turnover of £178m, operating profit of £6.5m and a pre-tax profit of £5.5m.
However, its management accounts for the five-month period ending 31 May 2023 showed turnover was £64.7m and operating loss was £4.4m: “We understand that this loss has been attributed to the increasingly competitive nature of the logistics industry, challenges with cost base inflation and associated price challenges in passing this though to the company’s customer base,” the report said.
Interpath also explained how Tuffnells’ domain name, ‘know-how’, trademarks, software codes, website, phone numbers, social media accounts, records and signage were sold to Shift IP for £500,000 and sister firm Shift Logistics and DX entered into licence to occupy agreements in respect of the firm’s properties.
DX also paid £1m to acquire the company’s interest in a freehold property in Ipswich.