The notes on pages 3 to 12 form part of these financial statements.
Motorplus Limited is a private company limited by shares incorporated in England and Wales. The registered office is Speed Medical House, 16 Eaton Avenue, Matrix Park, Chorley, Lancashire, PR7 7NA.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
Turnover is recognised at the fair value of the consideration received or receivable for premium commissions earned on the sale of insurance policies and claims handling fees provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Premium income
For insurance policies where the Company does not bear the underwriting risk, premiums are recognised as turnover when owed by the customer.
Referral income
Referral income is recognised when the performance obligation is complete and the revenue can be reliably measured.
Interest Income
Interest income is recognised in the Statement of Comprehensive Income account using the effective interest method.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Judgement is required on the adequacy of claims provisioning on risk products held. The Company makes provisions for liabilities using best estimate techniques in particular based on experience of claims and reliable measurement information. The provision has decreased in the year as higher claims have been experienced which the Directors attribute to the business activity being in run off.
Judgement is required on the adequacy of the insurance policy cancellation provision. The Company makes provisions for cancelled policies using reliable past source data and communicating closely with policy underwriters for quantification of open policies at the Statement of Financial Position date.
The average monthly number of persons (including directors) employed by the company during the year was:
Amounts owed by group undertakings are repayable on demand and interest free.
Amounts owed to related parties are repayable on demand and interest free.
The claims provision is an estimation of the costs arising from claims outstanding at the year end in respect of which the Company has the intention to settle. The ultimate liability is dependent on the level of claims currently notified and claims that are yet to be notified.
At the Statement of Financial Position date, the Company held client money of £Nil (2022 - £7,527). Neither the asset nor corresponding liability are recognised in the financial statements because the Company does not retain the risks and rewards of ownership.
The Company ceased its trading relationship with its 2 largest First Notification of Loss customers in February and March 2022. Following a review of the contract in respect of one of these customers it was noted that the supplier had not charged VAT on their sales invoices, having since contract inception believed that the services were exempt supplies under Item 4, Group 2, Schedule 9 VAT Act 1994.
Having taken legal advice from leading VAT Counsel, it is the Directors considered opinion that these services were in fact purchases that should have had VAT applied by the supplier. Furthermore, the contractual position is considered to be one whereby the monies paid by Motorplus to the supplier were inclusive of VAT. As such, because the Company has not been supplied with a VAT invoice it has not been able to recover the input VAT on those purchases.
The Directors have undertaken a review of the past historical position and have ascertained that, should input VAT be able to be reclaimed, then there would be an amount of up to c.£5.4million owed by HMRC.
The Company submitted the matter for review by HMRC. HMRC have concluded that no VAT is recoverable because they believe that both Motorplus Limited and the supplier believed that the supplies were exempt at the time the services were provided. The company does not agree with that opinion and therefore the conclusion of HMRC. Furthermore, upon advice of Mr Brown, the company believes that even if that were the case, the supplies should still have been subject to VAT and VAT invoices provided by the supplier. As such the company has lodged an application for the matter to be heard by a VAT Tribunal.
This contingent asset has not been recognised within the trading results for the year ended 31 May 2023 or any prior periods.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
The Company has taken advantage of the exemption conferred by section 33.1A of FRS 102 and has not disclosed transactions with 116 Cardamon Limited and its subsidiaries.
Dr Rajnish Luthra
Dr Rajnish Luthra is the ultimate controlling party by virtue of his majority shareholding in the Company's ultimate parent company, 116 Cardamon Limited. During the period, Dr Rajnish Luthra received a salary of £6,533 (2022 - £6,533).
Speed Medical Examination Services Limited
Speed Medical Examination Services Limited is a related party by virtue of common directorship and ultimate controlling ownership. At the year end there is an amount owed to Speed Medical Examination Services Limited of £23,315 (2022 - £2,016), and an amount owed from Speed Medical Examination Services Limited of £5,319 (2022 - £18,355). Sales in the year to Speed Medical Examination Services Limited were £56,755 (2022 - £160,203) and purchases in the year from Speed Medical Examination Services Limited were £11,806 (2022 - £16,272).
Medical Legal Appointments Limited
Medical Legal Appointments Limited is a related party by virtue of common directorship and ultimate controlling ownership. At the year end there is an amount owed by Medical Legal Appointments Limited of £NIL (2022 - £NIL) and an amount owed to Medical Legal Appointments Limited of £108 (2022 - £378). Sales in the year to Medical Legal Appointments Limited were £855 (2022 - £8,460).
FL 360 Limited
FL 360 Limited is a related party by virtue of common directorship and ultimate controlling ownership. At the year end there was an amount owed to FL 360 Limited of £969,170 (2022 – £935,829), and an amount owed from FL 360 Limited of £1,801 (2022 - £NIL). Purchases in the year from FL 360 Limited were £NIL (2022 – £30,241).
Handl Communication Limited
Handl Communication Limited is a related party by virtue of common directorship and ultimate controlling ownership. At the year end there was an amount owed to Handl Communication Limited of £43,613 (2022 – £42,179).
Corpore Limited
Corpore Limited is a related party by virtue of common directorship and ultimate controlling ownership. At the year end there was an amount owed to Corpore Limited of £29,635 (2022 - £71,385). Purchases in the year from Corpore Limited were £148,424 (2022 - £83,683).
Cogent Hire Limited
Cogent Hire Limited is a related party by virtue of common directorship and ultimate controlling ownership. At the year end there was an amount owed by Cogent Hire Limited of £510 (2022 - £38,388). Sales in the year to Cogent Hire Limited were £105,500 (2022 - £291,250).
The immediate parent company, and ultimate controlling parent, is 116 Cardamon Limited, a company incorporated in England and Wales. The registered address of 116 Cardamon Limited is Speed Medical House, 16 Eaton Avenue, Matrix Park, Chorley, Lancashire, PR7 7NA.
The ultimate controlling party was Dr Rajnish Luthra by virtue of his shareholding in 116 Cardamon Limited.