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The firm at the centre of UK Government legal action to recover £122m, after it won contracts through the so-called ‘VIP lane’ of suppliers, has posted assets of just over £4m.
The claim, being brought by the Department of Health and Social Care (DHSC), is looking to recover the full multi-million-pound figure from PPE Medpro, under a contract for it to supply 25m sterile surgical gowns that was awarded in June 2020.
Byline Times was the first publication to reveal in September 2020 that PPE Medpro had won hundreds of millions in Government COVID contracts, just 44 days after being incorporated.
The company won two contracts worth more than £200 million to supply personal protective equipment (PPE) to the Government at the height of the first wave of COVID-19. These contracts were awarded without a competitive tender process.
One was for face masks worth some £81 million, the other was for £122 million worth of sterilised gowns to the NHS, which the Government is trying to recover.
Conservative peer Michelle Mone is accused of lobbying Michael Gove and Lord Agnew at the start of the pandemic in 2020 to secure business for PPE Medpro. She has denied having any relationship with the company.
It has been alleged that millions of pounds worth of the medical gowns were never even used, even though PPE Medpro claims it delivered the contract to its terms and supplied equipment “fully in accordance” with the contracts.
In response, the Government announced at the end of last year that it is suing PPE Medpro, which won contracts through the so-called ‘VIP lane’ of suppliers, claiming that the gowns supplied “did not comply with the specification in the contract”.
Accounts for a Small Company
PPE Medro’s unaudited accounts, published last month for the year ended 31 March 2022, show just over £4m in current assets and just over £47,000 in cash. It reported no employees for the accounting period and none in 2021.
A fuller accounting of the firm’s finances is not possible as it is exempt from audit under section 477 of the Companies Act 2006 relating to small companies.
The accounts were signed by company director Anthony Page. However, the filing at Companies House shows his appointment as director and secretary of the company was terminated on 11 May, and he is no longer ‘a person with significant control’ of the firm.
On the same day, Arthur Lancaster was appointed as director, and listed as the only person that now has significant control of PPE Medro, defined as someone who owns 75% of the shares or more.
Arthur Lancaster has previously been described by the Daily Mail as “a chartered accountant who has worked with the Duke of York for many years” and a long-term business associate of Prince Andrew.
He is named as the director of a firm called AML Tax (UK) Ltd. In January, the Guardian reported that three payment programmes operated by AML were named as tax avoidance schemes by HM Revenue and Customs.
The company is linked to the husband of Baroness Mone, Douglas Barrowman, as he is the founder and chairman of the Knox Group, a financial services and wealth management firm based on the Isle of Man, which is widely considered to be a tax haven.
HMRC told the Guardian that AML ran the three newly named tax avoidance schemes and was “a part of Doug Barrowman’s Isle of Man-based Knox Group”.
HMRC won legal cases against AML last year under tax laws that require companies to notify HMRC of payment schemes that should be classified as tax avoidance schemes because one of the “main benefits” is to obtain a “tax advantage”.
Tax avoidance means exploiting the system to find ways to reduce an individual or company tax bill, as opposed to tax evasion, which is illegal, and involves concealing income or information from the HMRC.
According to the reports, Mr Lancaster, told the tax tribunal last year that AML was part of the Knox Group, together with other companies such as Knox House Trust, of which he was the chairman in 2019.
In March, HMRC also won a separate legal case against AML, which was fined £150,000 after being found not to have provided details to the tax authority required by law. In that case, Mr Lancaster was said by the tribunal to have been “evasive” and displayed “a lack of candour” in some of the evidence he gave.
In response to the HMRC’s case, he told the Guardian: “I should point out that AML Tax (UK) Ltd ceased its business over six years ago, following the introduction of the much-criticised 2019 loan charge. This was designed by HMRC to retrospectively tax arrangements which had, until then, been in accordance with the legislation as confirmed by several tax cases.”
Mr Lancaster could not be reached for comment on his appointment. The Byline Times has previously been the subject of legal threats from PPE Medpro. But neither the lawyers acting on behalf of the company nor Mr Page, responded to a request to comment on Mr Page’s decision to step down, on Mr Lancaster’s appointment; or the information in the company’s accounts.
For its part, the DHSC declined to comment on the legal options it had available to recover the £122m figure from PPE Medro at a time when it is showing so little in assets.
It would only confirm that it has commenced legal proceedings in the High Court against the firm for breach of contract regarding gowns delivered under a contract dated 26 June 2020.
A DHSC spokesperson added: “We have launched legal proceedings against the firm in question and as such it would be inappropriate to comment further.”