bambam Posted February 19, 2009 Posted February 19, 2009 The self-proclaimed god of Money, Martin Lewis is busy crowing about how wonderful he is again. Anyway, I've been digging through the public records of his site (see companieshouse.gov.uk). Last accounts were filed to y/e 31st October 2006. Lewis set up his site in 2002 as a private Ltd. Pretty standard. As such you are required to file accounts no later than 10 months after financial year end. Provided the company turned over less than £5.6 million and has less than £2.8 million of assets on its balance sheet, you don't have to get your accounts audited. Also if either of the above provides, you don't have to submit a p+l. The accounts filed 31st October 2006 are here: http://www.scribd.com/doc/12607381/Moneysa...31-October-2006 They show £1.1m due within 1 year (i.e. money owed to MSE), and, interestingly, £1.15m due to creditors. Some of this will likely be VAT, but mostly it will be Corporation Tax. At £1.1m / 30% is £3.65 million in PROFIT. Anyway, come August 2008, when Lewis was supposed to file his accounts for y/e August 2007, he decided to go private: http://www.scribd.com/doc/12607514/Martin-...limited-company This is a very unusual move, it gives Lewis unlimited personal liability in legal actions, etc., and is normally only done for top secret businesses. I presume that MSE was no longer a 'small company' and hence required to file full accounts. It could be him being a pikey to save accountancy fees, since the profits clearly would have been more than £5.6m for 2007. Anyway, he *should*, as I understand it, still publish the accounts for 1/11/2006 - 31/10/2007, since the company was a limited company for the whole of that period, and also for 1/11/2007-31/10/2008, since the company was limited for 9 months of that period. Anyone able to clarify? The fines are btw fairly hefty: http://www.companieshouse.gov.uk/about/gbhtml/gba5.shtml The other issue is even more serious, and that if you look at the conversion to an unlimited company, Lewis' name is given on page 1, and the number of continuation sheets is "NIL". In other words, Lewis is the only member of his unlimited company. Companies used to be required to have at least two members, but this was changed in 1992 by the The Companies (Single Member Private Limited Companies) Regulations 1992 to allow people to set-up one man companies http://www.opsi.gov.uk/SI/si1992/Uksi_19921699_en_1.htm in order to encourage small enterprise But these changes do not apply to unlimited companies, and quite rightly so. This is the Insolvency Act 1986, s122, as amended by the Regulations above http://www.insolvency.gov.uk/insolvencypro...solvencyact.pdf 122.— Circumstances in which company may be wound up by the court. (1) A company may be wound up by the court if— (a) the company has by special resolution resolved that the company be wound up by the court. ( being a public company which was registered as such on its original incorporation, the company has not been issued with [a trading certificate under section 761 of the Companies Act 2006 (requirement as to minimum share capital)] 94 and more than a year has expired since it was so registered, © it is an old public company, within the meaning of the Consequential Provisions Act, (d) the company does not commence its business within a year from its incorporation or suspends its business for a whole year, (e) [except in the case of a private company limited by shares or by guarantee, ] the number of members is reduced below 2, In other words, Moneysavingexpert.com should be wound up, because its corporate structure is illegal. Any comments?
0q0 Posted February 19, 2009 Posted February 19, 2009 I didn't think he made that sort of money! Flippin Norah ! Sacreau bleu! Well I don't know anything about the legal structures, I'm just stunned at these possible earnings. No wonder he's so chipper!
bambam Posted February 19, 2009 Author Posted February 19, 2009 I didn't think he made that sort of money!Flippin Norah ! Sacreau bleu! Well I don't know anything about the legal structures, I'm just stunned at these possible earnings. No wonder he's so chipper! MSE now has more traffic than Moneysupermarket, which has been valued at up to £700m and had £163m of revenue in 2007.
pepsi Posted February 19, 2009 Posted February 19, 2009 MSE now has more hugs than Moneysupermarket... Fixed
happy_renting Posted February 19, 2009 Posted February 19, 2009 Anyway, he *should*, as I understand it, still publish the accounts for 1/11/2006 - 31/10/2007, since the company was a limited company for the whole of that period, and also for 1/11/2007-31/10/2008, since the company was limited for 9 months of that period. This would mean he should have filed his 2006-2007 accounts before 1st Sept 2008. I once complained to Co House about a very large Broadband Company failing to file accounts. They just send a reminder to the company and normally don't seem bothered about prosecuting (another example of a failing regulator). If they do prosecute, they don't advise the complainer, they are cagey about giving details for some reason (perhaps hiding behind the Data Protection Act) even though convictions are a matter of public record.
bambam Posted February 19, 2009 Author Posted February 19, 2009 This would mean he should have filed his 2006-2007 accounts before 1st Sept 2008. Correct. He seems to have converted to unlimited just before that date. presumably thinking it would excuse him from submitting accouns for the FY ending 9 months before. I don't think so. Also my understanding is he should submit accounts for November 2007-August 2008, since the company was limited at that time. Could be wrong, but in any case the lack of two members is BIG trouble.
bambam Posted February 25, 2009 Author Posted February 25, 2009 The other issue is even more serious, and that if you look at the conversion to an unlimited company, Lewis' name is given on page 1, and the number of continuation sheets is "NIL". In other words, Lewis is the only member of his unlimited company.Companies used to be required to have at least two members, but this was changed in 1992 by the The Companies (Single Member Private Limited Companies) Regulations 1992 to allow people to set-up one man companies http://www.opsi.gov.uk/SI/si1992/Uksi_19921699_en_1.htm in order to encourage small enterprise But these changes do not apply to unlimited companies, and quite rightly so. This is the Insolvency Act 1986, s122, as amended by the Regulations above http://www.insolvency.gov.uk/insolvencypro...solvencyact.pdf 122.— Circumstances in which company may be wound up by the court. (1) A company may be wound up by the court if— (a) the company has by special resolution resolved that the company be wound up by the court. ( being a public company which was registered as such on its original incorporation, the company has not been issued with [a trading certificate under section 761 of the Companies Act 2006 (requirement as to minimum share capital)] 94 and more than a year has expired since it was so registered, © it is an old public company, within the meaning of the Consequential Provisions Act, (d) the company does not commence its business within a year from its incorporation or suspends its business for a whole year, (e) [except in the case of a private company limited by shares or by guarantee, ] the number of members is reduced below 2, In other words, Moneysavingexpert.com should be wound up, because its corporate structure is illegal. I looked into this, seems another member was added 'MSL Nominee Limited' a limited company owned by Lewis. So they have the two members.
happy_renting Posted February 25, 2009 Posted February 25, 2009 Odd that he appears to have slipped up on the legal front. For the record, I have nothing against the guy and find his site useful. Its all the ((((hugs)))) from the posters that are irritating. The Fora here are much more robust
qwe3333 Posted February 25, 2009 Posted February 25, 2009 most of the 1.1 million in creditors is likely to be AP, salary?, accruals, etc. company is probably in a vat refund position so that would be in debtors. the company made a loss in 2006 so i doubt if there is any CT. just because he signed in aug 08, doesn't mean its effective from august 08. osborne clarke are a big accounting firm and im sure they know what they are doing.
bambam Posted February 25, 2009 Author Posted February 25, 2009 most of the 1.1 million in creditors is likely to be AP, salary?, accruals, etc. AP? Salaries will be tiny, Lewis is unlikely to be paying himself more than minimum wage, if that, and judging by the job postings on the site, e.g., " MSE Job Opportunity: No experience needed -------------------------------------------------------------------------------- Thought you may be interested to see this job opp for a keen enthusiastic MoneySaver" Ominous words in there include: "keen" "enthusiastic" and "No experience needed" In other words it's paying PEANUTS. Equally "Hi Folks, MoneySavingExpert.com is seeking a recent Computing graduate or an enthusiastic fledgling Developer (with at least one years web development experience) to come into a small IT team working for one of the UK's largest financial websites, based in West London. The role will require good knowledge of PHP/MySQL and HTML as well as experience of the linux shell. The position is suited to a candidate who is keen to progress their skills and also have a day to day impact on all aspects of the website. " At that time it's unlikely they had more than a dozen staff, so there's no way that more than £20k of that total is salaries. Regarding accruals, this is true I guess there would be a lot of commissions earned but not yet paid. Even so, it's to me obvious that Lewis went unlimited because he was making so much money that he would have to publish a p+l and get audited. company is probably in a vat refund position so that would be in debtors.the company made a loss in 2006 so i doubt if there is any CT. How do you know that? The public accounts only include a balance sheet, so no details on profit or loss. just because he signed in aug 08, doesn't mean its effective from august 08. osborne clarke are a big accounting firm and im sure they know what they are doing. The company was re-registered on 13/8/08 as Unlimited. The documents are on Companies House to show that.
qwe3333 Posted February 25, 2009 Posted February 25, 2009 AP = account payable. vat payable because he is likely to buy lots of vatable things like servers, connection lines, support, accountants, etc. Cant think that he would have much as vatable billings. retained earnings have dropped so he must have made a loss. it looks like he took most of the money out in 2006, maybe to prepare for going unlimited. his balance sheet, 1m in assets and liabilities, doesn't suggest that revenues are that high.
bambam Posted February 26, 2009 Author Posted February 26, 2009 AP = account payable.vat payable because he is likely to buy lots of vatable things like servers, connection lines, support, accountants, etc. Cant think that he would have much as vatable billings. retained earnings have dropped so he must have made a loss. No. It just means he paid out the retained earnings as a dividend. Not a loss at all. My company's retained earnings dropped last year, but the company made more profit than the previous year. his balance sheet, 1m in assets and liabilities, doesn't suggest that revenues are that high. £1.15m in assets seems like a LOT to me. Fixed assets are only £17k, as you'd expect, just a few PCs. But debtors are £1.08m, and these must be commissions and possibly professional fees for Lewis on TV. I had a look at my quidco earnings, seems they pay within 3 months on average. In that case £1.08 million due within 3 months implies £4.32 million of revenue. In fact the payment time is probably less than that, so the revenue is higher. Note that the business is (or was) almost tripling in size each year, so the earnings for Q1 of the year would be much lower than Q4, so that £4.32 million is more of a projection of future earnings than current. Anyway, clearly if Lewis had not paid large dividends there would be a lot of cash in the bank. Besides that, the point is that there is £1.15m of accounts payable within a year. As you say VAT is probably nil payable. One month's salaries would be at most £20k = £0.02m Apart from salaries to ones own staff, there's relatively little that wouldn't be paid in advance. His advertisers would pay him in arrears, but his bills for things like hosting etc. would be payable in advance, and would in any case be very small. Can you come up with a scenario where he has more than £100k in debts other than the CT liability? To me the fact that he went unlimited in 2007 suggests that he exceeded the 'small company' theshold, and was going to have to publish full audited accounts. Those requirements are that you: have a turnover of not more than £5.6 million; and have a balance sheet total of not more than £2.8 million The balance sheet total of £2.8 million is 2.5 times larger than the 2006 total, which is consistent with the growth seen 2005 to 2006 (compare the year end debtor figures), so it's likely that was going to be exceeded. But unless you can come up with an explanation for the debts other than a £1m+ CT bill, it seems that profits were over £3 million, and they too were to exceed the threshold. It's not terribly competent of Lewis or his accountants to leave the switch to a few days before the accounts were due. I bet what happened is that the accountants were aware that his revenue was growing 250% YoY, and knew that the business would grow beyond "very small company" status, but when they started to prepare his accounts in August 2008 and told him that he now had to file proper audited accounts with a P+L, Miserly Martin said "No way! I'm not paying for auditors", and went unlimited to save a few quid.
alastair.wood Posted February 26, 2009 Posted February 26, 2009 His accountant is also his Uncle, Tony Tesciuba (known as Tax Tony), he's a trustee for the charity which is run by Lewis' father: http://blog.moneysavingexpert.com/2007/02/...arity-trustees/ http://www.msecharity.com/index.html?pid=7 He (Tax Tony) is a clever guy, when the site was smaller he used to help out on the forums with tax issues and I'd say from seeing his excellent advice back then, there is little chance he would have left converting the company until the last minute for no reason.
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