Hotel Chocolat founder asks HMRC to take chocolate instead

Hotel Chocolat founder Angus Thirlwell raised £5m for his business via an innovative 'chocolate bond' scheme. But now HMRC want their cut.

by Rebecca Burn-Callander
Last Updated: 05 May 2016

Speaking at the London Entrepreneurial Exchange launch in Birmingham yesterday, Thirlwell regaled the audience with tales of the Hotel Chocolat journey. From creating the original concept in 2003 and acquiring a cocoa plantation - it is the only UK-based chocolatier to grow and harvest its own cocoa - to inventing the brand's new Roast and Conch cafe and expanding abroad, he raced through the potted history in a very modest 15 minutes. 'The Dutch speak great English, which is useful as we didn't want to change the packaging,' he said of the brand's recent expansion into Amsterdam. 'They know what's in a champagne truffle.'

The story is a lively one, and Thirlwell himself has the look of a Branson-esque dynamo, all tousled blonde hair, ruddy tan and perfect diction. And, like the Virgin founder, Thirlwell is regarded as something of an industry maverick.

Case in point, the company runs a very clever chocolate bond scheme - a kind of loan from its customers. In return for investing £2,000 or £4,000 to help the business grow, these bond-holders receive bi-monthly interest payments. Except that the interest is paid in chocolate, not cash. The bonds have been a huge success and the business has raised £5m to fund its international expansion and work on ever more ambitious chocolate lines. 

But this tale has a twist that shocked the assembled entrepreneurs and investors. When HMRC got wind of the scheme, the taxman came a-knocking for his cash. 'Despite everything that government has said about businesses taking the initiative and coming up with innovative ways to raise finance, not whingeing about a lack of cash but getting stuck in, the Inland Revenue has taken a very hard line on our chocolate bonds,' said Thirlwell. ' They claimed that we owed them tax and, because chocolate is a product, even VAT!'

It seems an odd stance to take indeed, given the government's rhetoric on supporting entrepreneurs, and shows the disconnect between what the Coalition says it's doing for small businesses, and its actions. Still, at least the story has a funny side. MT caught up with King of Shaves founder Will King and the inventor of the 'shaving bond', to find out what he thought of the furore. 'He should ask his customers to send across a couple of chocs from each interest payment,' recommended King. And this idea isn't a million milles away from Thirwell's own reaction to the taxman's demands: 'I felt like just saying, 'Where do you want me to deliver the chocolate then?'' he laughed.

Read more about Angus Thirlwell and Hotel Chocolat

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