Tax settlement hits KFC franchisee’s profits

A €2.48m tax settlement with the revenue authorities in the UK last year hit profits at Michael Herbert’s KFC franchise business there.

Belfast businessman, Mr Herbert operates the KFC franchise here and in the UK and new accounts for his UK business disclose the £1.94m (€2.48m) settlement with revenue in the UK.

The tax settlement described as ‘revenue enquiry settlement’ in the accounts resulted in lower operating profits at Herbel Restaurants Ltd.

However, a writeoff of a £7.19m loan due to a connected party resulted in pre-tax profits of £7m in the 12 months to the end of December 31 2013.

This followed the business recording a modest loss of €81,701 in 2012. The business recorded the large increase in pre-tax profits in spite of revenues decreasing 18% from £28.7m to £23.53m.

The accounts disclose that in spite of the drop in revenues and the Revenue settlement, Mr Herbert, a regular on newspaper rich-lists, last year shared a dividend payout of £2.58m.

This followed a dividend payout of £528,000 in 2012.

The firm’s revenues are generated by fast food sales, rental income from investment properties and sale of trading properties.

In 2013, the firm generated £21.99m from KFC sales with £1.5m generated from rental income. The profit last year includes £397,000 written off in investments and non-cash depreciation and amortisation costs of £987,000.

The firm made the profit after interest charges of £670,292.