MissChu founder Nahji Chu: How the ATO cost me my business

Nahji Chu, the founder of Vietnamese food chain Miss Chu, says her company would not have collapsed into voluntary administration if the Australian Tax Office had granted her request for an extension to pay her tax bill.

Amidst launching a social media campaign to remind customers the MissChu business is still trading, Chu revealed to SmartCompany she asked the ATO to grant her a three-month extension to her tax bill to allow her to open two new MissChu outlets in Double Bay and Balmain in Sydney.

“[The new stores] would have allowed me to pay my bills but the Tax Office didn’t see it that way,” Chu says.

Chu says she was in the process of “restructuring the company’s corporate structure to be more conducive to tax liabilities” in late 2014 but “ran out of time” to get the right processes in place.

The Sydney operations of MissChu were placed in voluntary administration just days before Christmas, with administrators Rahul Goyal and Jannamaria Robertson of KordaMentha appointed on December 23, 3014.

Chu has previously said she would attempt to buy back the business, which has continued to trade throughout the administration process, and last month said on Facebook the patronage of the Sydney stores means “the business will not be put into liquidation”. Chu said in the same statement the MissChu restaurant in London has closed and the international licence will be sold.

Chu says she is currently “in the dark” as to the progress of the administration process, but believes KordaMentha received as many as 56 offers for the business, which were shortlisted to 12 offers.

“The word from their office is there are now maybe five or six offers but as to whether I am part of the shortlist, I have no idea,” Chu says.

But Chu is adamant the business can only survive with her involvement.

“It is really vital the business has me at the core of it,” she says. “Otherwise it will just be another chain without a soul.”

Chu describes calling in administrators as her “putting up my hand saying I need help”.

“It doesn’t mean I’ve gone bust, or all the negative things people are saying I’ve done are true,” she says.

Chu dismissed reports MissChu had been failing to pay its tax bills, saying her company has “paid an enormous amount of tax”.

“The $4 million in debt, for a business our size, that’s normal,” Chu says, referring to reports of the company’s financial woes, which emerged after the company’s first meeting of creditors.

“The most I was behind in rent was one month, and it was only for two stores. The most we were behind with our suppliers was six weeks.”

“In the grand scheme of things, we weren’t that far behind in repayments.”

But Chu admits payroll tax was one of the “hurdles” she is faced with, given MissChu’s payroll is worth approximately $1 million.

Chu says the Australian government should do more to help companies in the hospitality industry, which are forced to pay “ridiculous” penalty rates and do not receive as much assistance as companies in other sectors, including car manufacturing.

“The cost of labour is expensive and the cost of fresh food is extremely high, and we are making products that helps keep people lean and healthy,” Chu says.

“It’s a little like people who drive for a living, they should receive more demerit points … there is a blanket rule on tax but if this is what you do for a living, we should have leniency from the Tax Office.”

Chu says she had always hoped to sell MissChu “at a market rate, rather than a failed rate” but there are misconceptions in the community about what voluntary administration means.

“Voluntary administration is not a dirty word,” she says.

“It’s a shame for this story to have a sad ending, but it shouldn’t be about a bad or sad ending. We had problems and needed support.”

But Chu says she is “incredibly proud” of what she has achieved with MissChu, as are her staff, and she hasn’t given up hope of continuing the MissChu name.

“I was the visionary and I still haven’t fulfilled my full vision,” she says. “I want to grow the foundation so it is an ongoing company that gives back to the community.

“A lot of my staff are saying to me, if you’re no longer part of the brand, we will follow you,” she says.