The Camera Centre in Lerwick effectively went bust last month owing more than £250,000 before being bought and relaunched as a fresh company by new owner Ben Mullay, it has emerged.
Former owners Cecil Hughson and his wife Sheila owe the taxman £100,000 from their business while their suppliers are due £103,000. The Bank of Scotland is owed £30,000.
The collapse is being blamed on dwindling business and a disputed tax bill. Because The Camera Centre partnership was not a limited company or limited liability partnership, the Hughsons are personally liable for the business debt. The couple already have personal debt and their home in Sandwick and another small house in Yell are having to be sold to raise funds towards the business debts, although Mr Hughson said the family were rallying around to keep them in their possession.
Speaking to The Shetland Times about the demise of his popular and well-respected business after 23 years, Mr Hughson, 60, was still able to be philosophical. He said: “I started with nothing and I’ve ended up with nothing. But I’ve enjoyed the bit in between.”
He added: “We’ve five bairns and one grand-daughter and they, and me and the wife, are in perfect health so we’re very rich. A lot of millionaires would love to be able to say that.”
Any debts owed in Shetland were “very little”, he said, and none of the shop’s local customers had lost out.
His main equipment supplier is owed about half the total amount that traders are due but he said that was after The Camera Centre had put about £5 million its way in sales over the years.
Those owed money by the partnership have been told officially by Fife-based insolvency practitioners Ferris Associates that the firm’s difficulties arose in recent years for several reasons including customers switching to the internet to buy cameras and photographic supplies, people shopping in Lerwick supermarkets instead of Commercial Street, the rise of digital photos and the decision to run a second shop in the Toll Clock Centre which then had to close.
However, Mr Hughson said this week he believed his main problem was the Inland Revenue, now renamed HM Revenue and Customs, which had launched an investigation into his affairs. It claimed he owed tax and he was unable to prove otherwise. He felt he had been unfairly penalised, also declaring that the taxman had been paid a lot of money over the years, including through the free tax-collecting service that businesses provide for the government by charging VAT.
The Hughsons signed trust deeds with Ferris Associates on 30th April because they could not pay the shop partnership’s debts. The process avoids them being declared bankrupt. Mr Hughson advised anyone in business to make sure their firm is a limited company to avoid becoming personally liable for debts.
Trustee John Ferris said only about £42,500 is expected to be raised from the sale of assets and other recovered funds. It is anticipated that creditors will be paid some money back eventually.
The Hughsons’ financial problems are entirely separate to the operation of the new Camera Centre business started earlier this month by Mr Mullay. He set up a limited company, took on the shop lease and bought the business name. Mr Hughson has been taken on as an employee.
Asked if retailing was becoming unviable for local businesses in the centre of Lerwick, Mr Hughson said: “It’s always been tough on businesses. The public think it’s easy but it’s not. For every other business there’s help from the council. But anything involving retail they think you’re millionaires so they don’t want to help you.”
He contrasted that with the millions of pounds of local authority money pumped into industries like fish farming, fishing and knitwear.