Between 2013 and 2017, HMV reported earnings before finance cost, depreciation and intragroup expenses of £61.5 million.
Some £48 million of this is accounted for by what the company calls “non-trading intragroup expenses” i.e. services bought from other entities controlled by Hilco.
HMV states that the £48 million related to things like licensing agreements, property and management services.
The taxable profits have also been further reduced by interest charges of £10.3 million payable to various related parties and banks.
Altogether, nearly £58 million has been extracted from HMV by its owners and banks which financed the debt and operations of HMV.
Hitting Innocent Stakeholders
HMV made its £61.5 million profits by using the social infrastructure funded by taxpayers, but has not paid a penny in UK corporation tax.
Such a state of affairs is permitted by the current laws. On tax,
Hilco states: “We do not engage in planning schemes or arrangements that we consider could be perceived as being aggressive or artificial in nature”.
HMV’s most recent accounts for the year to 30 December 2017 show borrowing of £19.5 million, mostly from related parties and banks. They are likely to fully recover all of this from the sale of assets.
Around £51 million is owed to various suppliers, including £5.2 million to HMRC for PAYE and National Insurance contributions. As unsecured creditors, they are unlikely to recover anything substantial from the bankruptcy of HMV.
There has been a huge transfer of wealth from employees, taxpayers and suppliers to vulture funds controlling HMV.
The £51 million obtained from unsecured creditors enabled HMV to build its assets, which will ultimately solely benefit its shareholders and related entities, functioning as secured creditors.
