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The firm linked to the former Conservative peer Michelle Mone that was found last month to have supplied unusable personal protective equipment during the pandemic owes £39m in unpaid taxes, according to company documents.
PPE Medpro, owned by Mone’s husband, the Isle of Man-based businessman Doug Barrowman, was put into administration on 30 September, the day before the high court judgment was made public.
Mrs Justice Cockerill ruled that the company had breached its contract with the Department of Health and Social Care, awarded in June 2020, to supply 25m sterile surgical gowns, and must repay the full £122m it received.
A preliminary statement by the administrators Forvis Mazars, filed at Companies House dated 30 October, put the total owed to the DHSC at £148m because the court judgment imposed interest on the £122m from late 2020 when the gowns were rejected. Further interest is now accumulating at an annual rate of 8%, the DHSC has said.
The list of creditors in the administrators’ document also includes HMRC, stated to be owed £39m. Given the confidentiality observed by HMRC over individuals’ and companies’ tax affairs, this is the first time it has been made public that PPE Medpro faces a demand on this scale for unpaid tax.
The administrators did not explain the nature of the unpaid tax, although it appears to be corporation tax due on PPE Medpro’s profits as the document also states that no money is owed for employees’ PAYE, national insurance contributions or VAT.
The total debts of the company are put at £188m, comprising the £148m owed to the DHSC, the £39m in unpaid tax, £207,000 owed to Grosvenor Law, the company’s lawyers in the recent court battle with the DHSC, and £1m owed to the Isle of Man entity linked to Barrowman that put 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.
In December 2023, Mone admitted in a BBC interview that the couple had lied to the media, and the couple confirmed their involvement in the company. Barrowman acknowledged he had been paid £60m and transferred money into the trust; the couple said his children were beneficiaries as well.
After the company missed a 15 October deadline to repay the money, the health secretary, Wes Streeting, said: “We will pursue PPE Medpro with everything we’ve got to get these funds back where they belong – in our NHS.”
But the government faces legal obstacles if it is to get any money back, as no funds were left in the company and it is in administration.
The administrators’ statement makes clear that they do envisage being able to ultimately recover money, and may make legal claims against unnamed “third parties”.
