Broken by the CRA: Uncertainty for Fixed coffee shops due to money spat

Loyal customers of St. John's two Fixed Coffee shops were disappointed when they showed up for their fix on Thursday.

Both of the company's locations — one on Harvey Road the other on Duckworth Street — were closed. A note on the door on the Harvey Road location said it would be closed for an "undetermined amount of time."

"We're closed today because last Thursday, unfortunately, we had our bank accounts frozen by the Canada Revenue Agency (CRA)," said Fixed owner, Jonathan Howse.

He said the taxman wiped his bank account clean on Monday, taking $52,000.

The CRA claims Howse hasn't been paying his bills.

Howse insists he has and has the paperwork to back it up, but he was told it'll take weeks for the CRA to work through his file and refund his money.

"We'll potentially go bankrupt unless we can get some of that money refunded or we can rearrange, restructure some things within the business," he said. "It's very hard times for myself and my staff."

CRA says money never arrived

Times have been tough for business owners in St. John's and Howse said Fixed was no exception. He fell behind on CRA payments and was working on paying off the debt.

"We've always had payment plans and we've made those payment plans," he said. "Very recently, we struck up a new payment plan. I sent the cheques, I made electronic payments."

Over the last few months, he says he's paid $51,000.

"I thought everything was going fine until my account was froze on [last] Thursday," he said.

He said the CRA claims neither the cheques nor the electronic payments were received, and that Howse has not been paying his debt. So it froze and emptied his account.

Howse said the CRA didn't give him a heads up that anything was wrong before they took control of his bank account.

Has the proof, but not the time

Howse says he has the records to show that the cheques have gone through and the electronic funds had been received.

"I have the proof, but that'll take weeks in court with lawyers and accountants, and by that time we will be bankrupt," he said.

Right now, he's putting all the paperwork together to show the payments have been made so he can contact the CRA's ombudsman and ask for the money to be returned to his account.

"According to the collections officer, this will take weeks, weeks to be possibly refunded," he said.

"They say once the garnishment has taken place and they've taken the money from our account, it cannot be reversed. I have to provide the paperwork and make my case for the overpayment."

Howse isn't sure how he's going to get by in the meantime.

The CRA told CBC News that it couldn't comment specifically on this case because of privacy issues.

"It is not the CRA's intention to cause anyone hardship," it said in an emailed response.  "Anytime the CRA becomes aware of a situation where a taxpayer is experiencing difficulty, we make every effort to reach out to the affected party to resolve the situation."

Duckworth to open, Harvey to close

Between the two locations, Fixed employs 18 people. Their pay cheques bounced last week.

"They all are behind on their rent this month," he said.

He and his staff had a meeting Thursday morning.

"It was rough," said Howse.

He said he paid them in cash with money from his credit card and told them what was happening, and that he understood if they wanted to find new jobs immediately rather than take a risk and go back to work for him when the Duckworth Street location opens up again on Friday.

"All of them have said they'll come back to work for now."

The Harvey Road location, he said, will be closed for good.

"We're going to try to sell the equipment at this location, or potentially sublease it as a cafe to someone who can make a viable business up here."

Howse hopes that will generate enough income to sustain the Duckworth location while he waits for a CRA refund.