Company linked to Michelle Mone hit with £39m tax demand

PPE Medpro, owned by Mone's husband, Isle of Man-based businessman Doug Barrowman, was placed into administration on September 30, a day before the High Court decision was made public.

 Justice Cockerill ruled that the company had breached its contract with the Department of Health and Social Care in June 2020 to supply 25 million sterile surgical gowns and must repay the full £122 million it received.

 An initial statement filed at Companies House on October 30 by administrators Forvis Mazars stated the total amount owed to the DHSC was £148 million, as the court ruling imposed interest on the £122 million from the time the gowns were rejected through the end of 2020. The DHSC has stated that the interest rate is now increasing at an annual rate of 8%.

 The administrators' document also lists HMRC as creditors, stating that it is owed £39 million. Given the confidentiality HMRC maintains regarding the tax affairs of individuals and companies, this is the first time it has been made public that PPE Medpro is facing an unpaid tax demand on this scale.

 The administrators did not specify the nature of the unpaid tax, although it appears to be corporate tax payable on PPE Medpro's profits, as the document also states that no money is owed for employee wages, National Insurance contributions, or VAT.

 The company's total debt is estimated at £188 million, including £148 million owed to the DHSC, £39 million in unpaid taxes, £207,000 owed to Grosvenor Law, the company's lawyers in a recent court battle with the DHSC, and £1 million owed to an Isle of Man entity linked to Barrowman, which placed the company into administration.

 The administrators have not provided details about PPE Medpro’s government contracts or where its profits have gone, but the document states: “A review of the company’s bank statements reflects a small number of entities that have received the vast majority of funds from the company’s bank accounts.”

 The DHSC awarded the £122m gowns contract to PPE Medpro, and another worth £80m for face masks – a total of £203m – after Mone first approached Michael Gove, the then Cabinet Office minister, in May 2020.

 The contracts were processed via the “VIP lane” operated by Boris Johnson’s Conservative government during the pandemic, which gave high priority to people with political connections. Mone was appointed a Conservative member of the House of Lords by David Cameron in 2015.

 She and Barrowman denied through their lawyers for years that they were involved in PPE Medpro, in response to questions from the Guardian and evidence that they were involved. In November 2022, the Guardian revealed that Barrowman had been paid at least £65m from PPE Medpro’s profits, then transferred £29m to an offshore trust set up to benefit Mone and her three adult children.

 The DHSC sued the company in December 2022, following public and political outcry after the Guardian’s reporting. After a 12-day trial at the high court’s Rolls Building in the summer, Cockerill concluded that PPE Medpro had not complied with the legal and regulatory requirements to ensure that the gowns, made in China, were certified and validated to be sterile.