Plus: A chat with the Transport for London boss running the tube strike negotiations — and how the "hardworking businessman" putting up flags in south London tried to scam an insurer.
Surely all government needs to do is pass legislation making landlords liable for unpaid business rates up to the value of the lease agreement and all this would go away? Immediately break clauses would be introduced to make sure that landlords could evict tenants who do not pay.
Criterion's solicitor claims their only responsibility is to hold their tenant to the terms of their retail commercial lease, but in my experience, it is normal for retail leases to include a clause that the occupier must pay their taxes. e.g. here's the clause from a Sainsbury's commercial lease for a store premises I am familiar with (these leases are usually available to buy from the Land Registry as the rent is high enough to meet the requirement for mandatory registration): "To pay all existing and future rates, taxes, charges, assessments and outgoings which may at any time during the Term be assessed charged or imposed upon or payable in respect of or by the owner or occupier of the Premises ". I assume they include these clauses to reduce the risks of the local and national tax authorities coming after Criterion. It sounds to me that they may be selectively enforcing the terms of the lease, but it obviously depends on the tenant's covenants in the specific lease.
When the phoenixing happens and a new company takes over operations, is Criterion varying the existing premises lease to switch the company name to the new one (in doing so, without good reason, it could be at risk of enabling tax evasion), or is it accepting payment from the new company in relation to the existing lease with the old company, when there is no contract between Criterion and the new company? Wouldn't a properly run landlord business want their actual tenant paying the rent, not some other company?
I can't help but wonder why the local authority and HMRC, given the debts are so large, are not going to the High Court to get a writ and sending enforcement officers in to take control of all the stock and shut the businesses down - they have the power to enter commercial premises and seize stock and cash. There may be good reasons they can't do that, including it being under Scottish law, and maybe the process is too slow to be effective or phoenixing gets around it, but it seems absurd that a shop can deliberately not pay rates or VAT and suffer no consequences, and worse than that, be expanding their dodgy tax avoiding business empire.
I work for a property company and while I'm not on the property management and rent collection side of thing, I know we are very careful about who pays the rent. If the lease is in the name of "Kingdom of Treats" or "John Smith T/A Kingdom of Treats" we would expect the rent to be paid by that entity. If the rent suddenly started coming from "Kingdom of Sweets" or "Joe Bloggs T/A Kingdom of Sweets" we'd want to know what was going on.
It’s hard because there appears to be a ready supply of people, who are willing to put their real names to legal paperwork and assume legal responsibility for the shops and the tax debts.
The only way I can see this being dealt with is to look into whether these people are truly running the shops - and why Criterion Capital keep renting to these people.
A “Kingdom of Sweets” shop used to exist in Criterion Capital’s London Trocadero building at Piccadilly Circus.
At some point a few years ago it was replaced by a “Kingdom of Treats” shop with near identical logos. The “Treats” variant has only popped up in two buildings owned by Aziz and Criterion.
This subtle tweaking of names and logos seems common in the gift shop world.
Surely all government needs to do is pass legislation making landlords liable for unpaid business rates up to the value of the lease agreement and all this would go away? Immediately break clauses would be introduced to make sure that landlords could evict tenants who do not pay.
Criterion's solicitor claims their only responsibility is to hold their tenant to the terms of their retail commercial lease, but in my experience, it is normal for retail leases to include a clause that the occupier must pay their taxes. e.g. here's the clause from a Sainsbury's commercial lease for a store premises I am familiar with (these leases are usually available to buy from the Land Registry as the rent is high enough to meet the requirement for mandatory registration): "To pay all existing and future rates, taxes, charges, assessments and outgoings which may at any time during the Term be assessed charged or imposed upon or payable in respect of or by the owner or occupier of the Premises ". I assume they include these clauses to reduce the risks of the local and national tax authorities coming after Criterion. It sounds to me that they may be selectively enforcing the terms of the lease, but it obviously depends on the tenant's covenants in the specific lease.
When the phoenixing happens and a new company takes over operations, is Criterion varying the existing premises lease to switch the company name to the new one (in doing so, without good reason, it could be at risk of enabling tax evasion), or is it accepting payment from the new company in relation to the existing lease with the old company, when there is no contract between Criterion and the new company? Wouldn't a properly run landlord business want their actual tenant paying the rent, not some other company?
I can't help but wonder why the local authority and HMRC, given the debts are so large, are not going to the High Court to get a writ and sending enforcement officers in to take control of all the stock and shut the businesses down - they have the power to enter commercial premises and seize stock and cash. There may be good reasons they can't do that, including it being under Scottish law, and maybe the process is too slow to be effective or phoenixing gets around it, but it seems absurd that a shop can deliberately not pay rates or VAT and suffer no consequences, and worse than that, be expanding their dodgy tax avoiding business empire.
Great work, Jim.
I work for a property company and while I'm not on the property management and rent collection side of thing, I know we are very careful about who pays the rent. If the lease is in the name of "Kingdom of Treats" or "John Smith T/A Kingdom of Treats" we would expect the rent to be paid by that entity. If the rent suddenly started coming from "Kingdom of Sweets" or "Joe Bloggs T/A Kingdom of Sweets" we'd want to know what was going on.
Note to self: never stay in a zedwell! "Windowless by design". "No TVs or other distractions".
Just read this in the Edinburgh Minute. Do you have any faith in the authorities to do anything?
It’s hard because there appears to be a ready supply of people, who are willing to put their real names to legal paperwork and assume legal responsibility for the shops and the tax debts.
The only way I can see this being dealt with is to look into whether these people are truly running the shops - and why Criterion Capital keep renting to these people.
This may change shortly, of course, with the new director identity verification process which is being introduced.
All of these directors are real people. They’d pass any verification check. The problem is whether they’re the real real people.
I assume Kingdom of Treats has a close relationship to the purple-and-orange Kingdom of Sweets shops that were in Dublin until recently.
Interestingly… seemingly not.
A “Kingdom of Sweets” shop used to exist in Criterion Capital’s London Trocadero building at Piccadilly Circus.
At some point a few years ago it was replaced by a “Kingdom of Treats” shop with near identical logos. The “Treats” variant has only popped up in two buildings owned by Aziz and Criterion.
This subtle tweaking of names and logos seems common in the gift shop world.