A start-up bank that counts Lord Mandelson among its board members was hit by a winding up petition from the taxman just days after its chief executive resigned.
HM Revenue & Customs (HMRC) slapped the Bank of London Group, a so-called challenger bank set up to cater for businesses, with the petition last week over allegedly unpaid bills.
The legal action was disclosed just days after the departure of the company’s chief executive and founder, Anthony Watson, who has in the past donated money to the Labour Party. He handed control of the company to chief risk and compliance officer Stephen Bell.
Winding up petitions are used by creditors as a form of legal action against companies with outstanding debts. Creditors then have to prove that the company cannot pay its debts.
When they are used by the HMRC, it is typically because a tax bill has gone unpaid for more than 21 days.
The winding up process can lead to a forced sale of company assets, although the vast majority are settled before reaching this stage.
The Bank of London was reported by Sky News over the weekend to be in talks over raising up to £50m from investors.
A spokesman blamed the winding up petition on “a simple administrative handling delay due to an internal miscommunication”.
The Bank of London was founded by Mr Watson, a former Barclays executive, in 2021.
Mr Watson is one of the City’s only openly gay bank chief executives and a high-profile campaigner for LGBT rights who was once described as “one of the most influential gay men in the world” by The Guardian. He was awarded a CBE last year for services to the LGBT community.
He is a major Labour Party donor and has given almost £500,000 to assorted Labour MPs and the central party since 2015, according to Electoral Commission data.
While he has given up the position of chief executive, he will remain with the company as a senior adviser and sit on its board in a non-executive capacity.
Lord Mandelson, the former business secretary under Gordon Brown and a pivotal driver of the New Labour movement, is deputy chairman of the bank’s board and sits alongside a handful of other banking veterans such as the former Goldman Sachs and Citi executive Harvey Schwartz.
The company has attracted high-profile investors, such as Richard Reed, the co-founder of Innocent Drinks, and the former owner of the Renault Formula 1 team, Eric Lux.
When it began trading, the Bank of London’s bosses claimed the company was worth $1.1bn (£840m), making it a so-called “unicorn”, owing to proprietary technology it said would reduce the cost and complexity of international payments.
The business raised tens of millions of pounds worth of funding within weeks of opening, skyrocketing it up the rankings of the UK’s most valuable fintech companies.
However, it has struggled to turn a profit since launch. Pre-tax losses grew from £15.7m to £41.8m in 2022, its latest available accounts show.
That has not stopped investors ploughing money into the firm, however. Last February it raised $40m (£30m) in a funding round.
A Bank of London spokesman said: “The issue was due to a simple administrative handling delay due to an internal miscommunication, which has been addressed.
“We spoke with HMRC this morning, and they are currently updating the filing. While this update may take a couple of days to reflect online, it is in process.”
A HMRC spokesman said: “We take a supportive approach to dealing with customers who have tax debts, working with them to find the best possible solution based on their financial circumstances.”