TrailAddiction Collapsed After Alleged French Witch-Hunt

by
May 11, 2017

Alpine guiding company TrailAddiction collapsed into administration on the back of six-figure fines and claims for back taxes from the French authorities, insolvency documents reveal. The firm, which had traded since 2003, believes that it was the victim of a witch-hunt by the French state thanks to a high-profile dispute over the employment of UK-qualified guides.

TrailAddiction, as well as several other France-based guiding companies using UK staff, had faced a battle from 2013 onwards to obtain recognition for UK qualifications. Although ultimately successful, sole director Alistair Jamieson claims its challenge to the French position caused it to be targeted for increased regulatory oversight from 2016.

“It is the director’s opinion that as a result of the above highly visible and politically sensitive negotiations [regarding qualifications] the company came under administrative scrutiny from the French authorities on all aspects of its business,” according to information supplied by Jamieson as part of the administration.

No more of this (sad face)...
No more of this (sad face)…

This included weekly inspections, a full tax investigation, and a review of all employee contracts and working practices covering the previous five years.

“The increased administrative burden, legal fees and enforced changes in operational practices demanded by the French authorities, had a negative impact on operating profit and distracted from the ability of management to focus on day-to-day business,” says Jamieson’s statement.

Although its French operation carried out the guiding from its base near Bourg St Maurice in the Savoie region, staff were provided via “short-term secondment” from the UK operation, with social security payments made in the latter country. But under pressure from the French tax authorities, TrailAddiction in 2016 “re-contracted staff on French payroll”. Despite this, tax officials refused to recognise the “UK payroll status” of employees for the period from 2011-2016, and gave notice of their intention to levy a “six-figure penalty” on the firm.

After working with the UK tax authorities, TrailAddiction initially succeeded in reducing the fine by “over 100,000 Euros”, and, based on French legal advice, was confident of obtaining a further cut of a similar scale. As such, Jamieson was “confident there was no risk to TrailAddiction’s French operations in 2017”.

However, a parallel investigation found that the company had allocated too little turnover to its French operation, therefore underpaying tax and VAT. This resulted in a second six-figure claim from the French state.

No word yet on whether the Davos event will go ahead.
No word yet on whether the Davos event will go ahead.

Around half the outstanding amount had been paid off prior to the administration as part of a repayment plan, the report says. According to the company’s statement of affairs, TrailAddiction owes £297,013 in French employment taxes, plus a further £67,462 in French VAT and company tax, along with another £9,513 to the French state. Initial insolvency advice was sought in June 2016, but the director took the decision to trade through the summer season of that year in order to fulfil the firm’s existing commitments, the report says. But faced with uncertainty over the ability to reduce the fines, administrators Gerald Krasner (contact info here) and Gillian Sayburn of Begbies Traynor were appointed on 6 March 2017.

Two related companies – TrailAddiction Chalets and Trans Savoie – were placed into administration on the same date. The latter owes at least £25,379 to TrailAddiction, but the report notes that there have been “substantial inter-company transactions” since the last accounts were prepared for the period ended 31 October 2015. However, the report states that “the director was unable to confirm the movement on the intercompany positions in the subsequent period”.

Accounts for the 12 months ended 31 October 2015 – the most recent available – show that it owed £25,026 in tax and social security contributions, a sharp rise on a figure of £776 the previous year.

No update on the Enduro 2 at Davos has been received – so still no word on whether this will go ahead.

 

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