COVENTRY City Council deputy leader Phil Townhend’s firm in liquidation is facing claims totalling £650,000 owed to the taxpayer.
The Labour councillor and lawyer also still personally owes nearly £50,000 to the former city centre-based law firm, Townshends LLP, while creditors still await money owed to them.
The company has been in liquidation for two years amid ongoing investigations, after previous attempts to settle bills to creditors via a Company Voluntary Arrangement (CVA) failed.
Coun Townshend transferred the business in April 2012 to the Law Partnership, where he set up with fellow Labour councillor and lawyer Abdul Khan.
Their firm hit the headlines recently after a tribunal found it was paying below the statutory minimum wage to one worker.
A new report on Townshends LLP to creditors – filed with Companies House last month by liquidator Matt Hardy of Birmingham-based Poppleton & Appleby – shows the total value of claims made by “Crown creditors” now stands at £657,831.
It is almost double the amount of £364,972 the liquidator reported a year ago was claimed by Crown creditors, which include HM Revenue and Customs (HMRC).
The liquidator’s latest report also states unsecured creditors have made other claims totalling £30,436.
It states Coun Townshend has pledged to repay £10,000 a month for the next five months to settle an overdrawn capital account still owed by him personally to the company in liquidation.
Mr Hardy adds in his report: “In light of the time elapsed since the date of my appointment I have impressed on Mr Townshend the need to clear the outstanding balance as soon as possible and adhere to the pledges made if legal proceedings for the recovery of the outstanding balance are to be avoided.”
Former Townshends LLP partner Gary Glover also had an overdrawn capital account, and had made inidividual arrangements to pay back creditors, the liquidator’s report adds.
Assets were transferred from Townshends LLP to the Law Partnership solicitors prior to, and without the knowledge of, the supervisor of the CVA. The matter has been subject to investigation by the liquidator.
Speaking in 2012 about the company’s insolvency, Coun Townshend said his intention was to repay the debt to the taxpayer in full.
He said three years ago his own personal tax bills were up-to-date and paid in full.
The intention under the CVA had previously been to pay back a minimum £4,000 for the first six months, then at least £6,000 per month for three years.
The tax bill included unpaid National Insurance and PAYE (tax free allowance) payments.
Coun Townshend claimed tax bills had gone unpaid for a year after problems he attributed to the recession when conveyancing work was particularly hit, and closure of the firm’s Birmingham office.
In response to our questions today, Coun Townshend said the liquidator had confirmed the new figure related to “a claim for VAT for £292,000.”
He added: “However this is – at this stage – just a claim and NO adjudication or admissions on this have been made by the liquidator.”
He added the liquidator, pending more accurate information, had indicated it was “probable that some of this sum is duplicated in the original £364,000.”
Coun Townshend added: “I can, however, confirm that I am in the process of repaying the capital account figure owed.”