The Coconut Tree defaults on CVA following £1.6m tax bill

The Coconut Tree restaurant group has defaulted on its Company Voluntary Arrangement (CVA), with documents showing it owes HM Revenue & Customs (HMRC) £1.6m.

The restaurant group entered a CVA last summer, just months after launching a £1m crowdfunding campaign which it said would help it grow to 50 UK restaurants.

Documents on Companies House now reveal the business has defaulted on the CVA owing HMCR £1,360,837 in VAT and £239,799 in PAYE and national insurance contributions.

Under the terms of the CVA, the Coconut Tree was required to pay £27,000 per month for the initial three months, followed by 45,000 per month for 12 months, followed by £50,000 per month for 10 months, increasing to £55,000 per month until April 2028.

The company requested a payment holiday in March 2025, which was granted, but despite the extension the outstanding arrears has put the company in default.

The Coconut Tree’s Cheltenham property was intended to be sold and then leased back to the business to release equity, but the company was unable to find a suitable buyer.

Proposals to operate a franchise out of the company’s Bournemouth site also fell through.

Joint supervisors Mark Boughey and Michael Field of Forvis Mazars suggest the company will be wound up with a hearing scheduled for later this month.

The Coconut Tree was founded by five Sri Lankan friends living in the UK and grew from trading out of a pub in Cheltenham to running eight restaurants across the UK.