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The boss of a city bakery which is facing closure after more than 40 years in business claims he’s been ‘shafted’ by HMRC.
Lathams of Broughton has been declared insolvent and director Jonathan Barton says a double-whammy of the Revenue changing its mind on a payment plan and rapidly increasing costs of butter and wheat have hit the Preston-famous cake and sandwich firm hard.
Expanding over the years to have a wide-ranging catering business as well as its cake and sandwich shop in Fulwood, the Lathams brand has become synonymous for the city with upmarket cakes.
Read more: Preston firm H Parkinson Haulage enters administration
But Mr Barton told Blog Preston he had been left saddened by how it had all come to an end.
He said: “We worked so hard to stay afloat during Covid, changing to doing takeaway afternoon teas, getting meals and supplies to frontline workers. It was a huge effort. We were doing thousands of meals-a-day to support people during the pandemic.
“And now, for the government to just turn round and leave us effectively high and dry is really disappointing.
“We had an agreement with HMRC and were two years into a five year repayment plan for the amount owning.
“It’s a large amount and then a few months back they came in and said ‘that deal isn’t valid anymore, we need that amount’.
“It’s almost ‘mafia-like’ behaviour to be honest, I was saying that to someone. I feel absolutely shafted.”
Mr Barton said the figure, of more than £250,000, was not possible for he and others to raise in such a short period of time and they’ve been left with no choice but to wind down their operations.
He said: “We’ve got a two-tier tax system. There’s those out there trying to cheat the system and then we’re there paying every penny into the agreement we had.
“How can they come along and just change the playing field? If you’ve got a mortgage fixed for five years and you make those payments you keep the roof over your head.
“We tried to challenge it but got told that’s the rules and there we go. They’ve been told to tighten up, as they say they haven’t got any money either – so something has to give, and in our case, it’s the whole business.”
Lathams was started in the 1970s as a family-run firm from a kitchen in Broughton and soon gained a glowing reputation for its cakes.
Mr Barton said the remaining family members – following the death of Gwen Latham in April this year – had been very supportive of his efforts to try and save the business as had firms like Booths who he supplies. Mrs Latham had worked with him to help set up the payment plan with HMRC before her passing.
He said: “Everyone’s worked really hard, and been as accommodating as they can – but it’s not just the Revenue, the costs for us have been skyrocketing because of the economy and inflation.
“Wheat’s more than doubled, butter tripled, making a cake is very costly now – even just turning the ovens on with what happened with gas and electric prices.
“I’ve worked as hard as I can and paid myself the minimum as we’ve tried to protect our staff jobs as best we can.”
Mr Barton – who formally applied to place Lathams of Broughton into liquidation in early August – says he hopes a deal is still to be struck with a new bakery operator.
He said: “We are hopeful someone is going to come in and take on the site.
“They won’t take on the firm as is because of the debts, they can’t carry that, but there’s an opportunity for a fresh start.
“The Lathams name won’t stay though but I understand there will be a nod to the heritage but with a modern twist on things.
“Hopefully we’ll be able to move a number of the staff over to the new bakehouse when they get operating.
“We will formally close in Fulwood and stop supplying for a period of time though. It will be a sad day. There’s no doubt about that.
“But I want people to know we’ve always done our best, and it’s all made from scratch here. So no, there won’t be a big cake sale sell off as it’s not like we have masses of stock. It’s made fresh.”
Lathams, according to its most recent accounts, had 85 staff but Mr Barton said this had already decreased due to the businesses challenges.
According to its most recently submitted accounts, which run to May 31, 2023, the firm had debts of £546,000 due within the next year. This was significantly reduced from the £1m figure seen in the previous year’s accounts.
Of that £546,000, more than £320,000 was owed to the Government through corporation tax and PAYE. A further £150,000 was owed to trade creditors with this figure also around half of that in the previous year.
The accounts show Lathams of Broughton was a subsidiary company of Lathams (UK) Limited – and in the most recent accounts Lathams of Broughton declared a dividend of £380,000 to Lathams UK (Ltd). No money is owed by Lathams of Broughton Ltd to Lathams (UK) Ltd.
HMRC said they did not discuss individual or business cases due to confidentiality rules but a spokesperson said: “We take a supportive approach to dealing with customers who have tax debts, working with them to find the best possible solution based on their financial circumstances.”
According to The Gazette, the official business administration publication, a meeting of creditors has been called for 23 August at 11.30am virtually to nominate a liquidator which is due to be Annette Reeve of Beesley Corporate Recovery based in Manchester.
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Additional reporting by Jamie Lopez
