A popular sweet shop is fighting for its survival after being told it must prepare to pay backdated VAT of £20,000 over a dispute involving freeze-dried Skittles.
Who's Got The Bag in Gosport High Street has launched an online campaign in a bid to raise the money it needs to stay in business.
Director James Epps told the Daily Echo: "Customers come in daily for a chat and buy a small packet of sweets.
"Everyone is saying 'We don't want you to close - please fight it'."
A Gosport sweet shop is battling to stay afloat after receiving a £20k VAT bill (Image: Who's Got The Bag)
Writing on the GoFundMe page launched in a bid to save the shop Mr Epps said the crisis stemmed from HMRC's decision to backdate a year’s worth of VAT on the store's freeze-dried products.
However, the figure he has been told to pay is calculated by his accountant, who has said to the £20,000 should be paid.
Mr Epps added: "We make freeze-dried toppings mainly for milkshakes, cookies, dessert shops, and bakeries - they’re not sold as snacks.
"But HMRC is claiming that because some customers left reviews saying they eat them directly, they count as snacks and must have VAT added.
"They’ve said we can’t win if we try to fight it, even referencing a case against Walkers about poppadoms in a bag."
A Gosport sweet shop is battling to stay afloat after receiving a £20k VAT bill (Image: Who's Got The Bag)
Mr Epps criticised what he described as the lack of proper guidance on the HMRC website, adding: "We've been left guessing. If they’d told us a year ago, we would’ve added VAT to our prices straight away.
"Instead, they kept saying they were checking 'next quarter', then doing it again and again for four quarters in a row. We gave them everything they asked for, but they just kept changing the rules.
"Our amazing MP, Caroline Dinenage, has stepped in to help and pushed them for answers, but we’re still being hit with the full liability.
"To make things worse, they’re now blanketing all our shop income even from VAT-free items like nuts, fruit, cookies and milkshakes just because it’s 'too hard' for them to break it down, even though we use Shopify, which gives a clear report.
"We’ve also contacted The Adjudicator’s Office, but they couldn’t help either. We’re doing everything we can.
"This whole situation has left us drained.
"We’re a small business with low footfall, rising bills and no way to pay this out of thin air. We don’t want to close our doors we love what we do and we love serving this community.
"If anyone can spare a couple of quid, or even just share our story, it could honestly save us.
"Thank you to everyone who has supported us so far, left a kind review, bought from our shop, or told a friend about us. We’re so grateful."
An HMRC spokesperson said the taxman does not recognise the figure.
They said: “This is not a HMRC figure and we don’t recognise the calculation. The customer should contact us directly.
“We take a supportive approach to dealing with those having difficulty paying what they owe and work with them to find the best possible solution based on their financial circumstances.”
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