Summerhall management pursued for more than £500,000 in tax battle with HMRC

Troubled Edinburgh "arts village" Summerhall has admitted it is being pursued for more than half a million pounds in a crippling legal battle over unpaid tax allegations.

The venue's management have raised the alarm about "extremely challenging" legal restrictions which have left them unable to pay staff, suppliers and companies owed box office money.

It has also admitted its forthcoming events calendar has been "severely impacted" by a winding up petition raised by His Majesty's Revenue and Customs.

A number of concerts, events and festivals have had to be moved to alternative venues or cancelled completely since details of the case emerged earlier this month.

Summerhall's financial problems have been mounting amid speculation that the entire complex is on the verge of being sold to a luxury housing developer.

However Summerhall founder Robert McDowell has pledged that the company will defend the legal action, which he said focused on allegations that it made around £1.5m in undeclared profits between 2016 and 2018.

He insisted the company wanted to keep trading "as far as possible" to try to secure the long-term future of Summerhall and said he was still hopeful that the winding up petition raised by HMRC could be resolved.

Summerhall has been facing an uncertain future since the venue was put up for sale earlier this year by Isle of Man-based Oesselmann Estate Limited.

Mr McDowell is the sole director listed on the Companies House website for Summerhall Management Limited, a separate company which has run the venue since it was first opened to the public for the Edinburgh Festival Fringe in 2011.

Hopes of the venue remaining intact under new owners soared in the summer when Summerhall Arts was in negotiations for a three-year lease with Oesselmann, which it said would "safeguard" its year-round programme of events.

However an "urgent appeal" for public financial support was made by Summerhall Arts last month as it warned that the venue was facing its "greatest existential threat." Within days, details of the winding up petition from HMRC had emerged.

In a new statement about the legal action, Mr McDowell said: “Summerhall Management is continuing to defend the petition to wind up the company that was recently served upon it.

"HMRC is pursuing Summerhall Management Ltd for over half a million pounds in corporation tax from many years ago (for 2016, 2017 and 2018) claiming that we have made £1.5m undeclared profits in those three years, which our tax advisors and I believe is incorrect.

"According to our annual accounts since 2012 and verified by our independent accountants, Summerhall Management Ltd has in fact made a loss annually.

"The decision has been taken, under advisement, to continue to trade as far as possible within the prescribed restrictions imposed upon us. Our hope in continuing to trade is to protect the future of Summerhall, its staff, and its clients, following this action.

"These restrictions have been extremely challenging, especially without access to our bank accounts. We cannot pay out box office income, make essential stock purchases, pay suppliers, refund customers or pay our staff payroll.

"Our events calendar has also been severely impacted. Some events have been moved to alternative venues or cancelled, whilst events requiring no financial outlay can go ahead.

"We continue to work with our professional advisors and HMRC to defend our belief that no corporation tax is due, and hope that a resolution can be achieved which will allow us to deal with this and move on quickly.”