WeightWatchers 2010 Annual Report Download - page 36

assessment against us with respect to UK VAT due for the periods July 1, 200
5
to September 30, 200
5
an
d
October 1, 200
5
to December 31, 200
5
, we asserted that these notices of assessment were invalid on the grounds
that they had been raised outside the relevant statutory time limits. HMRC indicated in November 2008 that i
t
agreed with our assertion that the notice of assessment for the period July 1, 200
5
to September 30, 200
5
was
invalid, and, in February 2009, confirmed that this notice had been formally withdrawn. As a result of the
expiration of the statutory time period with respect to UK VAT owed prior to October 1, 200
5
, we recorded i
n
the fourth
q
uarter of fiscal 2008 as a benefit to revenue for the
p
eriods
p
rior to October 1, 200
5
an amount o
f
approximately
$
9.2 million as an offset against reserves previously recorded including in part the charge
r
ecorded against revenue in the second quarter of fiscal 2008 for UK VAT liability.
I
n Marc
h
2009, June 2009 an
d
Septem
b
er 2009, HMRC ra
i
se
d
a
ddi
t
i
ona
l
not
i
ces o
f
assessment a
g
a
i
nst us
in
r
espect of UK VAT due for the periods Januar
y
1, 200
6
to March 31, 200
6
, April 1, 200
6
to June 30, 200
6
, and
Jul
y
1, 200
6
to September 30, 200
6
, respectivel
y
, which we similarl
y
believed were raised outside the relevant
statutor
y
t
i
me
li
m
i
ts. As a resu
l
t, we c
h
a
ll
en
g
e
d
an
y
amount o
f
UK VAT t
h
at HMRC c
l
a
i
me
d
to
b
e owe
dby
u
s
f
or an
y
period between October 1, 2005 and September 30, 2006 b
y
filin
g
notices of appeal durin
g
2009 with the
F
i
rst T
i
er Tr
ib
una
l
a
g
a
i
nst t
h
e UK VAT assessments
i
ssue
df
or an
y
suc
h
per
i
o
d
.T
h
ese appea
l
s were conso
lid
ate
d
an
dh
ear
d
to
g
et
h
er
i
nMa
y
2010, an
d
t
h
eF
i
rst T
i
er Tr
ib
una
l
su
b
sequent
ly i
ssue
d
aru
li
n
gdi
sm
i
ss
i
n
g
ou
r
conso
lid
ate
d
appea
li
nAu
g
ust 2010. We
h
ave
d
eterm
i
ne
d
t
h
at we w
ill
not see
k
appea
l
o
f
t
h
eF
i
rst T
i
er Tr
ib
una
l
’s
a
d
verse ru
li
n
g
w
i
t
h
respect to t
h
ese matters. In
fi
sca
l
2010, we
f
u
lly
pa
id
t
h
e UK VAT assessment an
d
determined that there was an over-accrual of $2.0 million with respect to this matter which was reversed to
r
e
v
enue
.
UK Self-Employment Matter
I
n July 2007, HMRC issued to us notices of determination and decisions that, for the period April 2001 t
o
April 2007, our leaders and certain other service providers in the United Kingdom should have been classified as
employees for tax purposes and, as such, we should have withheld tax from the leaders and certain other service
p
roviders pursuant to the “Pay As You Earn,” or PAYE, and national insurance contributions, or NIC, collectio
n
r
ules and remitted such amounts to HMRC. HMRC also issued a claim to us in October 2008 in res
p
ect of NI
C
which corresponds to the prior notices of assessment with respect to PAYE previously raised by HMRC.
I
n Septem
b
er 2007, we appea
l
e
d
HMRC’s not
i
ces as to t
h
ese c
l
ass
ifi
cat
i
ons an
d
a
g
a
i
nst an
y
amount o
f
PAYE an
d
NIC
li
a
bili
t
y
c
l
a
i
me
d
to
b
e owe
dby
us an
d
our appea
l
was
h
ear
dby
t
h
eF
i
rst T
i
er Tr
ib
una
li
n Jun
e
2009 an
d
Octo
b
er 2009. In Fe
b
ruar
y
2010, t
h
eF
i
rst T
i
er Tr
ib
una
li
ssue
d
aru
li
n
g
t
h
at our UK
l
ea
d
ers s
h
ou
ld h
av
e
b
een c
l
ass
ifi
e
d
as emp
l
o
y
ees
f
or UK tax purposes an
d
, as suc
h
,wes
h
ou
ld h
ave w
i
t
hh
e
ld
tax
f
rom our
l
ea
d
er
s
p
ursuant to t
h
e PAYE an
d
NIC co
ll
ect
i
on ru
l
es
f
or t
h
e per
i
o
df
rom Apr
il
2001 to Apr
il
2007 w
i
t
h
respect to
serv
i
ces per
f
orme
dby
t
h
e
l
ea
d
ers
f
or us. We are appea
li
n
g
t
hi
sa
d
verse ru
li
n
g
an
d
a
h
ear
i
n
gb
e
f
ore t
h
e UK Uppe
r
T
r
ib
una
l
(Tax an
d
C
h
ancer
y
C
h
am
b
er)
i
ssc
h
e
d
u
l
e
df
or
f
a
ll
2011.
I
n
li
g
h
to
f
t
hi
sa
d
verse ru
li
ng an
di
n accor
d
ance w
i
t
h
account
i
ng gu
id
ance
f
or cont
i
ngenc
i
es, we recor
d
e
din
t
h
e
f
ourt
h
quarter o
ffi
sca
l
2009 a reserve
f
or t
h
e per
i
o
df
rom Apr
il
2001 t
h
roug
h
t
h
een
d
o
ffi
sca
l
2009,
i
nc
l
us
i
v
e
of
est
i
mate
d
accrue
di
nterest. As we
did b
eg
i
nn
i
ng
i
nt
h
e
fi
rst quarter o
ffi
sca
l
2010, we
h
ave recor
d
e
d
,an
d
a
l
so
i
nten
d
to cont
i
nue to recor
d
, a reserve
f
or UK w
i
t
hh
o
ldi
ng taxes w
i
t
h
respect to our UK
l
ea
d
ers cons
i
stent w
i
t
h
t
hi
sru
li
ng on a quarter
l
y
b
as
i
s. Accor
di
ng
l
y, t
h
e aggregate reserve
f
or t
h
e per
i
o
df
rom Apr
il
2001 t
h
roug
h
t
he
end of the fourth quarter of fiscal 2010 is approximately
$
40.8 million.
S
a
b
atino v. Wei
gh
t Watc
h
ers Nort
h
America, Inc.
I
n September 2009, a lawsuit was filed in the Superior Court of California b
y
one of our former leader
s
alle
g
in
g
violations of certain California wa
g
e and hour laws on behalf of herself, and, if approved b
y
the court
,
o
ther leaders and those emplo
y
ees who have performed the location coordinator function in California since
September 17, 2005. In this matter, the plaintiff is seekin
g
unpaid wa
g
es and certain other dama
g
es. In October
2009, we answered the complaint and removed the case to the U.S. District Court for the Northern District o
f
20