Conviviality has announced it has temporarily suspended trading on the London Stock Exchange after it identified an unpaid tax bill of £30m owed to Her Majesty’s Revenue and Customs (HMRC), due 29 March.

As a result of the suspension, the UK wholesaler and distributor of alcoholic beverages cancelled the interim dividend of 4.5p per share that was due to be paid on Friday 16 March on the basis this would improve the company’s cash position by £8.2m.

This announcement follows the company releasing a trading update on 9 March revising its predictions for pre-tax earnings for the 2017-18 financial year. The revised estimate was 20% lower, representing a £5.2m drop in earnings.

This caused the wholesaler’s share prices to plummet by a total of 68%, which reduced the company’s value by approximately £300m.

On 13 March, Conviviality added to its earlier announcement confirming it expects its adjusted pre-tax earnings for 2017-18 to be between £55.3m and £56.4m.

It also explained the ‘material error’ mentioned as the reason for it having to revise its predictions was an ‘arithmetic error in the compilation of the forecast’.

The next day, the wholesaler announced it had discovered a £30m payment due to HMRC that had not been accrued for within short-term cash flow predictions, and thus could further negatively affect pre-tax earnings for the 2017-18 financial year. Conviviality asked PwC to assist with discussions with HMRC over the payment of the bill.

The company’s board decided that while it was analysing the likely impact of paying the tax bill on the company’s funding position, it was better to suspend trading for the time being.

Conviviality’s business is divided into two sections: Conviviality Retail and Conviviality Direct.

Conviviality Direct is a wholesaler to the UK drinks on-trade that serves 23,000 drinks on-trade outlets nationwide. The brand operates through businesses such as Matthew Clark and Bibendum; Matthew Clark is a drinks supplier to the UK hotel industry and Bibendum advises its customers on wine ranges.

Conviviality Retail is a franchised off-licence and convenience chain consisting of 370 companies with 700 outlets. The companies integrated into the brand’s network include Bargain Booze and Wine Rack.