Redsave return! Now facing a £1,049,703 fine from HMRC
It has been a few months since we last felt the need to write about Redsave. If you are not familiar with Redsave and their rather dubious past, Redsave is a company which offers discounts on products purchased on their site, but by doing so customers sign up to a monthly subscription fee of £19.95. In 2007 this was buried in the terms and conditions, and plenty of customers didn’t realise they had signed up to this particularly onerous term or had actually realised they were paying the subscription fee until some months later.
Many disgruntled consumers took to various internet forums to voice their displeasure and Redsave fired off numerous take-down notices in an attempt to have these comments removed claiming that they were defamatory. The BBC ran a documentary and highlighted the issue for many others to realise what had been going on.
Redsave at the time claimed that it was only the minority that did not understand this particularly 'quirky' feature of their service. Interestingly, one of their customers took Redsave to the Small Claims Court and Redsave settled the matter in full the day before. Quite telling, we think.
Anyway, what have they been up to recently that has caused this latest piece? Well, the HMRC has been on their case and has recently hit them with a HUGE fine. It seems that Redsave were not paying tax on the £19.95 subscription payments their members were paying. Redsave claimed that this payment was similar to a non-refendable deposit (or a management fee for the customers account) and therefore did not attract any tax.
During the months when the site's users had made no purchases, figures show that Redsave banked approximately £6m (according to an obscure tax tribunal). The parent company of Redsave, NettexMedia Limited, had not been paying tax on these fees and was therefore fined by the HMRC a huge £1,049,703. Ouch. Redsave have already appealed against this fine and the decision. This appeal was rejected last month by the tribunal judge and the decision for a further appeal has to be made within a couple of days.
Anyone who currently has any dealings with Redsave or their parent company should really look at considering their own position as a matter of urgency. Whilst we are aware that it does not always tell the full story, the most recent filed accounts for the parent company should not fill you with any confidence if they lose their appeal or decide not to pursue this.
As you can see from the snapshot of their accounts, their cash at bank has diminished considerably since 2007 and the same goes for their total current assets. Should they have to pay this tax fine, their position would undoubtedly get much worse. Keep an eye on the accounts and status of their parent company over the next few days.
Is anyone still trying to resolve any issues with Redsave from a few years ago or do you have a more recent complaint? Get in touch with us - firstname.lastname@example.org
Thanks to knacker for the initial tip.