Blackpool nightlife entrepreneur Basil Newby today told how an eight-year, £800,000 battle with the taxman was ended with the stroke of a pen.
After a bitter legal fight the millionaire businessman liquidated his In The Pink Leisure firm – which included Flamingos, The Flying Handbag and Roxy’s.
But it was business as usual today because the bars and clubs have been legally transferred and now come under the entirely separate Funny Girls umbrella.
Mr Newby said his £800,000 tax fight was sparked after Blackpool Council bought the original Flamingos in Talbot Square.
Although Mr Newby says the actual terms are subject to a council-imposed confidentiality clause, he added: “At the time the council told me I wouldn’t have to pay capital gains tax.
“About 18 months later I opened a letter from the Inland Revenue saying I owed them £800,000. If I had known I was liable for tax I obviously would have asked for a higher price when the sale was going through.”
The council refutes the claims it advised Mr Newby over tax he could be liable for.
A tax tribunal in Manchester ordered his company pay back the disputed £800,000 in instalments.
So far £300,000 has been paid – money Mr Newby says he should never have had to pay – but he adds: “I will just have to write that off now.
“What really hurt was having to wrap up the company I had for 30 years – it was my baby.”
In The Pink was placed in administration last month as part of what Mr Newby referred to as a “pre-pack” liquidation.
This is where a new company would be formed and the assets of the old company would be transferred via the mechanism of a Creditors Voluntary Liquidation.
Mr Newby says outside of the tax bill, there were no other creditors or debts owed when he liquidated In The Pink.
Claims made by readers on The Gazette’s website suggest there was outstanding employees tax and National Insurance. Mr Newby vehemently denies this.
On the issue of liquidating his firm to free himself of a massive tax burden, he added: “I can see why some people might be annoyed but I had always felt a little bit stitched up.
“In real terms the business is no different, life goes on as normal.”
The In The Pink Leisure firm had undergone trading difficulties in recent years with figures for the tax year ending April 2011 (the most recent ones available) showing the bars and clubs made a net loss of £375,000.
But Mr Newby says a good summer and Christmas last year has helped turn that around and that his companies had seen £250,000 profit in the first quarter of 2013.
He said: “The tax thing did crucify us and the last two years have been very difficult for everyone but we had a good summer and we are now quite cash rich and planning some major refurbishments.”
A Blackpool Council spokesman, said: “It is not the role or responsibility of a local authority to offer advice to private businesses on matters relating to finances or capital gains tax.
“Any business needing advice on such matters would be advised to speak to HMRC and/or their accountant.
“Mr Newby’s advisers would have been responsible for advising him on tax liabilities.”
The Gazette understands Mr Newby is now in dispute with his then accountant over the issue.
The former Flamingo Club and Flying Handbag pub on Talbot Road were purchased by the council using North West Development Agency funding allocated to Blackpool to buy land for the £220m Central Business District.
The properties were demolished in 2006 when the Flamingo and Funny Girls relocated to the former Odeon building on Dickson Road.