The directors of Spargo Consulting Plc have had to concede victory to the tax man and pay up, a situation that chief executive Tony Spargo described as totally unfair. The London Docklands-based software consultancy company had been in dispute with the Inland Revenue over National Insurance contributions and its PAYE pay-as-you-earn scheme on round sum allowances for its employees that work on site for clients. The directors were of the opinion that the company could get dispensation from the normal PAYE rules for such payments, despite its failure to get similar dispensation in 1989 after protracted negotiations. A slight trace of bitterness could perhaps be detected in chairman Bob Morton’s statement that the company pursued its claim on the basis of equality of treatment for all companies paying similar allowances, and feels hard done by given the time and expense the company has wasted. Tony Spargo said that his previous company got the dispensation – having been advised by the same lawyers – as do all its larger rivals. Since no provision was made in previous periods, an exceptional charge of ú323,000 has resulted in the first half in full and final settlement of the dispute. It is being met out of existing resources, said the company. After the charge, pre-tax profits for the six months to June 30 were down 68% to ú192,000 from turnover that grew 17% to ú3.3m. Morton said that the change in the company’s treatment following the settlement will not have an effect on future results. Meanwhile, investment of ú111,000 in the new the contract division will show positive results in the second half, according to Spargo. New clients won for the consultancy business in the half includes Lloyds Bank Plc and a lot of expansion at existing clients, particularly Co mputer Sciences Corp. The two major shareholders, Morton Tony Spargo have waived their dividend entitlements which would have come to ú163,000. The interim dividend of 1.75 pence is up from 1.6 pence last time. The shares were off five pence to 75 pence. Tony Spargo said that the company was looking forward to a very good second half.
