The hospitality firm was wound up following court action from HMRC after it accrued thousands of pounds in debt.

14:04, Fri, May 15, 2026 Updated: 14:14, Fri, May 15, 2026

Colorful historic street filled with tourists and decorated with multicolor flags

The hospitality firm runs two venues in Edinburgh (Image: Getty)

A UK-based restaurant firm has collapsed into liquidation following court action by His Majesty's Revenue and Customs (HMRC). Laila Edinburgh Limited, which ran two hospitality sites in the Scottish capital, was wound up in April after accruing significant debts.

The firm's 2025 accounts showed that it was £100,500 in the red, rising from £81,000 the year before, with trade creditors owed £13,000. This included £145,000 owed in VAT and £27,000 in corporation tax.

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HMRC told The Herald: "We take a supportive approach to dealing with customers who have tax debts and only file winding-up petitions once we've exhausted all other options, in order to protect taxpayers' money."

Prior to its collapse, the company described itself as a "woman-owned" breakfast and lunch destination "in the heart of Edinburgh", where "beauty meets comfort, with blooms, blush tones and good vibes all round".

The last few months have seen the number of companies entering insolvency rise across the UK, as soaring operating costs and disruption linked to the war in Iran took their toll.

Country-wide insolvencies rose 7% month-on-month in March to 2,022, while administrations surged 52% between February and March and were 82% higher compared with March 2025.

Compulsory liquidations also jumped 18%, while company voluntary arrangements doubled during the month to 2020.

Hospitality firms of all sizes have significantly scaled back their portfolios since the beginning of the year, with London-based Italian chain Spaghetti House shutting all its restaurants earlier this month.

The historic brand made all 101 staff redundant after its parent firm Lavval Restaurants tumbled into administration, with bosses blaming higher costs and "difficult" conditions in the face of "global instability".

Executive chairman Luigi Lavarini said: "Years of increasing costs from the pandemic, Brexit, Government budgets and global instability have created difficult market conditions for hospitality.

"Balancing these costs with reduced demand and spending from customers as they navigate the rising cost of living has proven too challenging."

The Express has contacted Laila Edinburgh Limited for comment.