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Auditors' warning to BIW
17:14 29 Sep 2004
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BIW Technologies, the IT group that offers internet project collaboration software, has announced more losses and its auditor PKF has issued a "fundamental uncertainty" warning. The auditor points out there would be "implications on the ability of the company to continue as a going concern", should it have to pay nearly £500,000 of back tax to the Inland Revenue.
BIW's results for the 12 months to 30 September 2003 were signed off on 2 August 2004. They show a pre-tax loss of £580,000 on a turnover of £2.7m. In the previous financial year there was a pre-tax loss of £2m on a turnover of £2.2m.
BIW had net debts of £7.7m at 30 September 2003, with repayment of the money owed due in February 2006. Staff numbers were trimmed from 41 to 34 in the period.
BIW faces a dispute with the Inland Revenue over the eligibility of R&D claims totalling £430,000 during the 36-month period to September 2002.
The group's directors are so confident of winning the case that they have not made a financial provision to cover the possibility of the verdict going against them.
However, the auditor's "fundamental uncertainty" warning highlights a scenario where in the event that tax is required to be repaid it will impact on the ability of the company to survive.
BIW's own statement read: "The company is expected to remain trading within its available cash resources for the foreseeable future, subject to the outcome of the tax enquiry."
If the Revenue wins the case, BIW would have to stump up £430,000 plus interest.
A subsequent tax credit for £59,000 would also be withheld.
BIW continued: "The company does not currently have sufficient cash resources in the event that it would be required to repay the tax credits. The directors believe that the claims were made in accordance with the guidelines prevailing at the time."
BIW points to 28,000 users in more than 3,000 companies at 30 September 2003, working on UK projects worth a total of around £12bn. Sainsbury's, BIW's largest customer, provides £600,000 a year of BIW's group income.
BIW's second largest customer has been Asite, which paid £780,000 for IT services in 2002 and a further £670,000 in 2003.
The figure will fall to £250,000 in 2004 following Asite's decision to build its own technology.
BIW's results for the 12 months to 30 September 2003 were signed off on 2 August 2004. They show a pre-tax loss of £580,000 on a turnover of £2.7m. In the previous financial year there was a pre-tax loss of £2m on a turnover of £2.2m.
BIW had net debts of £7.7m at 30 September 2003, with repayment of the money owed due in February 2006. Staff numbers were trimmed from 41 to 34 in the period.
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BIW faces a dispute with the Inland Revenue over the eligibility of R&D claims totalling £430,000 during the 36-month period to September 2002.
The group's directors are so confident of winning the case that they have not made a financial provision to cover the possibility of the verdict going against them.
However, the auditor's "fundamental uncertainty" warning highlights a scenario where in the event that tax is required to be repaid it will impact on the ability of the company to survive.
BIW's own statement read: "The company is expected to remain trading within its available cash resources for the foreseeable future, subject to the outcome of the tax enquiry."
If the Revenue wins the case, BIW would have to stump up £430,000 plus interest.
A subsequent tax credit for £59,000 would also be withheld.
BIW continued: "The company does not currently have sufficient cash resources in the event that it would be required to repay the tax credits. The directors believe that the claims were made in accordance with the guidelines prevailing at the time."
BIW points to 28,000 users in more than 3,000 companies at 30 September 2003, working on UK projects worth a total of around £12bn. Sainsbury's, BIW's largest customer, provides £600,000 a year of BIW's group income.
BIW's second largest customer has been Asite, which paid £780,000 for IT services in 2002 and a further £670,000 in 2003.
The figure will fall to £250,000 in 2004 following Asite's decision to build its own technology.
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