Crowdcube could be facing an HMRC penalty after mistakenly making interest payments to investors without deducting tax.
The equity crowdfunding platform, which has been used by several peer-to-peer lenders to raise funds in the past, revealed in its annual accounts that 78 interest payments were made between May 2017 and December 2019.
They were paid on behalf of unnamed collapsed mini-bond issuers as part of their administration process but Crowdcube failed to deduct and pay tax owed from the payments to HMRC.
The note in its accounts said this mistake has been rectified and no tax is owed but there could be penalties.
Crowdcube estimates that the penalty could be £213,000 but some of it will be covered by insurance.
“An unprompted and voluntary disclosure was made to HMRC immediately upon discovery of the error, however, there is uncertainty about the penalties or timing of these until here is a reply from HMRC,” Crowdcube said.
The company’s accounts show it posted revenue of £7.9m but ended the year to 30 September 2020 with a loss of £3m.
This was attributed to increased costs, more hiring and product development.
The accounts mention Crowdcube’s failed merger with Seedrs but there are no costs mentioned as this happened after the reporting period.
“We are extremely proud and pleased that Crowdcube has registered four profitable quarters and with a run rate of £12mn revenue,” Darren Westlake, co-founder of Crowdcube, said.
“Undoubtedly the run-up to this extraordinary 12 month period was challenging. But we stayed resilient, invested our energies in the right places, and rode out the difficulties alongside our hundreds of thousands of investors and hundreds of companies.
“This momentum shows no sign of ebbing and the rest of 2021 looks exciting as we roll out our Cubex secondary investment platform, launch our new retail intitial public offering platform and capitalise on upcoming cross-border crowdfunding rules that’ll cement our position as the favourite crowdfunding platform for exciting European businesses.”