LONDON (Alliance News) - Cello Group PLC on Wednesday said that HM Revenue & Customs, the UK's tax, payments and customs authority, has rejected the settlement offer made by the group, amid a dispute over zero rating of certain supplies to charities clients by a subsidiary of Cello Signal.
Cello said it made an offer of settlement to HMRC of GBP2.4 million in December to resolve the matter, with further information provided to HMRC in January.
"The offer was made following complex consultation with specialist advisors, and it was considered to fully satisfy the concerns that had been raised by HMRC," Cello said.
Accordingly, Cello said the provision of GBP3.2 million made in its accounts for 2015 was appropriate. "This provision also included an estimate for penalties and interest, but it assumed no contractual recovery of VAT from clients," the group added.
On Monday afternoon this week, Cello said, it received a letter from HMRC which "disappointingly rejected the settlement offer".
"Since receipt of this letter the group has been in discussions with its specialist advisors to understand its impact on the dispute. Discussions with HMRC also remain ongoing. The board will continue to assess and review its provision and will continue to update shareholders as the position regarding the dispute becomes clearer.
Shares in Cello were down 8.7% at 88.55 pence on Wednesday afternoon.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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