MFI and Homestyle are fighting hefty bills laid at their doors by HM Customs & Excise, who question the retailers' tax treatment of free insurance offers.
Last week, the tax authorities put MFI's outstanding VAT bill on insurance-backed structural guarantees at£28.5 million. Several months ago, they targeted Homestyle with a net figure of about£15 million.
A number of household retailers have been selling products with free guarantees attached and, under these circumstances, the company is liable to pay insurance tax, which is charged at a lower rate than VAT.
MFI said in a statement that it did not believe Customs & Excise had a valid claim: 'The company has appealed against the assessment and intends to contest it vigorously.'
Homestyle has been contesting its tax bill since last autumn. Chief executive Michael Rosenblatt said: 'We remain in consultation with Customs about whether or not is it going to be possible to resolve this matter.'
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