FULL STATEMENT
Company Name: Frosty Models UK Ltd
Date: 08/07/2026
It is with deep regret that we must announce a
significant scaling back of Frosty Models UK Ltd and the
immediate winding down of our main retail shop operations, effective
today.
Why This Has Happened: The HMRC Deadlock
For the past seven months, the HMRC VAT ComplianceOffice has failed to process and repay £27,470.01 in VAT that we have rightfully paid on stock, eBay fees, postage, rent, office
equipment, and repairs.
We have exhausted every possible channel of communication. Due to a total lack of correspondence or delivery
confirmation from the VAT Compliance team, it appears they are now
bypassing their own internal dispute process. We have been
informed that even the general VAT office has no direct access to the
compliance department.
As a direct result of this deadlock, we are forced to begin winding down our operations. The VAT office continues to
demand payment on sales while simultaneously blocking our ability to
reclaim VAT until Compliance responds.
While HMRC has withheld our refunds—effectively making everything we buy 20% more expensive—they still
require us to pay 20% VAT on every sale. To put this into
perspective:
- If we buy an item for £7.50, we cannot
currently reclaim the VAT.
- When we sell that item for £10.00, HMRC
takes £2.00 in VAT.
- This leaves us with just £0.50 to cover
stock costs, rent, wages, and overheads.
Operating on a 25% markup means surviving on less than a 5% margin. In many cases, it is actively costing us money to sell items rather than making a profit. We can no longer
sustain the business under these conditions. Our lenders are calling
in their loans, market conditions are slow, and because the timeline
for a resolution and the return of our funds has long passed, we have
been forced to make this difficult decision.
Our local MP, Richard Tice, is now actively helping us report this severe administrative failure to the
Adjudicator’s Office and, where appropriate, the
Parliamentary and Health Service Ombudsman.
Immediate Changes to Retail Operations
To protect the business and manage our cash flow, the following retail policies are now in effect:
- Immediate Stock Sale: Nearly all
current retail stock will go on sale immediately to liquidate
assets.
- No Pre-Orders or Reorders: We will not
be accepting standard pre-orders or placing regular stock reorders
during this period.
- Upfront Payments Only: We will only
order specific items if payment is made entirely upfront.
- Supplier Account Status: All of our
supplier accounts remain in excellent, good standing. We intend to
keep them that way so we can still special-order items for customers
and reliably replenish vital trackside inventory.
The Future of the Raceway & Trackside Shop
We are shifting our remaining efforts into the
racing side of the business to ensure the circuit survives:
- Shop Downsizing & Pit Expansion:
The current physical shop will be heavily downsized and eventually
converted into more pit areas for racers.
- Trackside Shop: This will remain open
but will only stock bare essentials, such as tyres, spares,
drinks, and snacks.
- Hire Vehicles: Our hire vehicle
services will remain fully operational.
- Race Fees: If HMRC continues to
withhold our VAT repayments, we may unfortunately need to increase
race fees in the future to cover the 20% deficit.
Notice for Second-Hand Commission Sellers
Sellers with second-hand items currently on our
shelves have two immediate options:
- Option A: Remove your items from the
shop entirely, provided any outstanding account balances are
settled.
- Option B: Reduce the price of your
items and accept the 20% VAT deduction on the final sale.
As per our established policy, payout for any
sold items will strictly be issued as Store Credit.
We are absolutely heartbroken to have been forced into this position by circumstances entirely out of our control. We want to thank our staff, whom we have unfortunately had to lay off,
and our incredibly loyal racing community. We hope you will continue
to support us as we transition to focus fully on the track.
Sincerely,
The Management
Frosty Models UK Ltd
