Target MD says "Revenue to blame for job losses"

I have heard this loads of times. A business folds and they blame the Revenue. As far as I know, the Revenue is generally very flexible and only attaches bank accounts when they have been messed around beyond tolerance.

This business folded because it was not profitable.

I don't know why it was not profitable, but there are many possible reasons

• Bad management
• Unfair competition from other hauliers who don't comply with the strict requirements
• A generally very bad economic environment

But don't blame the Revenue.



And what about the 290 jobs which were lost? These are not lost, they are just moved around. A Wear and Target's other clients will still have to move stuff around. Target's competitors will pick up the business and employ more people.



It's is quite different to an Irish exporter closing down and the jobs are completely lost to Ireland (although probably gained by some other country).

While there may still be the same movement of goods around the place, workers there will have lost their jobs, its not a pleasant experience, and really not one which require factious comment.

Hi Brendan
according to Newstalk lunchtime news the looked in to Targets accounts and they have over 1 million in profits . An employee that was on from their Cork depot then said that they were owed 2 weeks wages and that their warehouse was half full .
Seems a strange situation .

The MD is clearly omitting why they owed the Revenue approx 1.3 million euro, if they had the ability to pay off 1 million in the last few weeks and another 100k or so in the near future - why was the liability allowed to accrue?

Target employees and Tax dilemmas now being discussed on liveline

The ownership of 'Target Express' looks a little interesting to me. A new company was registered last year and they in turn registered the trading name 'Target Express Ireland', the same trading name as owned by College Freight Limited who are being reported in the news. You can guess yourself who the owners are !!

gillarosa said:

While there may still be the same movement of goods around the place, workers there will have lost their jobs, its not a pleasant experience, and really not one which require factious comment.

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I see nothing factious about Brendans post. In fact I agree with him; Revenue do all they can to keep businesses going while fulfilling their mandate to collect taxes.

Another supporter of Quinn goes down the drain and it's again another Revenue/Government/D4/Meejia conspiracy......

And what about the 290 jobs which were lost? These are not lost, they are just moved around

In my opinion that is a factious statement, nothing to do with Revenue fulfilling their mandate, or the business dealings of this particular company, its the dismissal of the importance of the employment of those workers in such glib terms.

Hi g

nothing to do with Revenue fulfilling their mandate,

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Correct, which is why I started it as separate paragraph with an "And..." at the start.

The media reported the loss of 290 jobs in the same way as they report the loss of a foreign owned manufacturer in Ireland. It is not the same at all.

I had to look up the word "factious" - it seems to mean contentious. If so, absolutely agree with you. That is why I put it in The Great Financial Debates forum.

I am challenging the fact that the Irish economy has lost 290 jobs. It has not lost any jobs. Sure the 290 employees will lose theirs but there will be 290 new jobs created in other companies and they have the right skills, experience and location to get them.

I do not understand why they blame Revenue for the closure.
If Revenue were owed money then they had to make every effort to collect that money on behalf of the people of this country.
Otherwise every company would put revenue payments on the long finger and we would have total chaos.
I suppose this company was trying to take a leaf out of Mick Wallace's book. I did Mick no harm to bypass Revenue.

Billo

It is the same for those people involved, regardless of the ownership of the company, given the economy its almost guaranteed that if (not when) they find new employment, it will be on lower terms and conditions.

Generally these types of cases indicate a cashflow problem. The business starts running out of cash and the easiest person not to pay in the short to medium term is the Revenue, while the business hopes that things ‘pick up’

If there is a cashflow problem it is either down to bad management practices or a lack of business coming in the door.

Bad management usually means debtors are not paying, creditors not being paid, too much cash tied up in stock etc. That’s the purely ‘cash in the till’ side but also perhaps general costs are too high so they are not being competitive therefore leading onto a lack of business. There’s a myriad of things that would need to be analysed in the business to get an idea of what is going on.

The Revenue are not some sort of vampire trying to put businesses to the wall. My experience with them is that they do not close businesses unless there is a very solid reason for doing so.

I would suspect that there is a lot in this case that we are not hearing about.

Brendans point is fair though, the number of jobs lost is generally in inverse proportion to what will be created when other companies take over the existing companies business (although probably a little less due to economies of scale). In this case it sounds like bad management as opposed to shrinkage in the overall market therefore that’s not an unreasonable assumption to make.

Of course individuals who lost their jobs today will be justifiably upset, but hopefully they can be subsumed into other companies who take on the work.

cian8 said:

The MD is clearly omitting why they owed the Revenue approx 1.3 million euro, if they had the ability to pay off 1 million in the last few weeks and another 100k or so in the near future - why was the liability allowed to accrue?

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I understood from a newstalk interview this morning that they owed revenue €300k.

I agree with the comments from the most recent poster. Cashflow is the most likely culprit here.

Incidentally, Brendan, I was astounded by your sweeping statement "This business folded because it was not profitable". It's a truism to say that its not enough for a business to be profitable, it must also have sufficient working capital.

The VAT system would definitely have worsened Target's woes as its turnover would have been big enough for it to be subject to the notorious "VAT on invoices" system, meaning that VAT must be paid on debtor balances before the debts are collected. Many of Target's smaller competitors would be exempt from this.

And spare me the usual 'D4 meeja conspiracy' spoofery that blights AAM discussions whenever something bad happens outside Dublin. It wasn't even funny the first time.

It's a truism to say that its not enough for a business to be profitable, it must also have sufficient working capital.

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Hi Tommy

You are quite correct. I actually had "lack of capital" in the first draft as one of the reasons why it might have failed. I thought it much more likely to be unprofitability in this situation as it's a long established company. It was very profitable in 2010 according to one report I had read. I thought it had good net assets as well.

The Revenue issued a statement which is published on Thejournal.ie

“Revenue does not comment on the tax affairs of any particular business or individual and cannot do so in this case,” the statement said.


“In general, cases are referred by Revenue for enforcement where a taxpayer or business has failed to comply with the obligation to pay tax that is due and where there are no satisfactory proposals towards addressing the debt.


“In every case, prior to enforcement action by Revenue, the taxpayer or business will have been informed that continuing non-compliance is likely to result in enforcement action.


“As Revenue Chairman Josephine Feehily, on previous occasions, has said “we want to help viable businesses and taxpayers who want to pay their taxes but can’t in the short term.


“We can, and do, put alternative payment arrangements in place to help such customers through difficult periods…But businesses and individuals must engage with us at the earliest possible opportunity and this engagement must be realistic.


“Revenue is not a lender of last resort and we have a duty to ensure that all our customers operate on a level playing field and all tax due is paid.”

If it was just a temporary problem like the owner said, why didn't he appoint a receiver instead of closing down?

Revenue does not have a track record of closing down viable businesses so I would imagine most if not all the blame lies on the company's side.

I feel sorry for the employees though.

Brendan Burgess said:

I am challenging the fact that the Irish economy has lost 290 jobs. It has not lost any jobs. Sure the 290 employees will lose theirs but there will be 290 new jobs created in other companies and they have the right skills, experience and location to get them.

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Brendan,
I'm not sure I agree with this, as it assumes that the competitors are operating at full capacity, which in these times is doubtful. Even if they were, not all of the current employees are "out on the road". Would a competitor need to add the same number of HR staff, for example, should they get the extra business? I doubt it as economies of scale would be at play. So, IMO the additional staff hired by competitors would only be a fraction of 290. How many exactly is anyone's guess. If there are a large number of competitors each getting a slice of the pie then only a tiny fraction of that 290 would be employed.

Overall, I would expect, in the short term, that the competitors would hire some extra staff to mee their increased demand, on a temporary basis. I would also expect a natural increase in the prices charged as supply has contracted. In the longer term, I would expect a new entrant to enter the market in order to chase these profits.

Not knowing anything about the employee's terms and conditions, I would take a complete punt and gues that any new employees hired by competitors would be on less-favourable terms in today's market. The reason for this is the downward pressure on prices, rising oil costs, ever-increasing taxes and the fact that there are so many people looking for work.

Finally, every company has a duty to pay taxes and any company blaming the Revenue should ask themselves why didn't they manage their affairs properly and pay the taxes? I'm sure if the company is as profitable as they make out to be then short-term finance would have been offered to pay this tax? If not, then the company should have cut its costs dramatically and entered into discussions with Revenue to arrange a payment plan. I don't think we're getting the full story here at all. The last thing the government / Revenue wants to do is go about closing valuable and profitable companies and increasing the dole queue.

Firefly

I would take facetious to mean some kind of inappropriate smart remark.

I personally think that there are probably tens of thousands of jobs that, if lost, will not be replaced in the economy for quite a while. Many companies are working on very low profit margins, if any at all, effectively operating as a source of income for staff and the revenue. As firefly states, any slack might easily be picked up by competitors with an overall loss in terms of total employment and a much reduced total take for revenue i.e. jobs are lost but a competitor increases profits. Remember that the state is heavily reliant on employment, a switch to low wages and higher profits will leave a shortfall in the national P&L account.

The main safety net to the loss of many more jobs is the expectation that things will recover, coupled with the administrative difficulty of getting rid of staff. If no recovery is likely in the medium term then there is an inevitability of jobs being lost in unprofitable companies. If a recovery is likely, however, then there is a genuine loss in the short to medium term.

An of course, there is the loss to people losing their jobs who (a) may not be fortunate enough to find another job and (b) have to go through the very traumatic process of uncertainty on losing their job.