Library Nightclub boss Yusuf Khan was hit with $4 million-plus tax bill one year before business collapsed

Yusuf Khan was chased for more than $4 million of unpaid tax only a year before the collapse of The Library Nightclub.

Financial records sighted by The West Australian show the Australian Taxation Office lobbed the bill following an audit in early 2023.

The Bentley-driving businessman had cash linked to a sole-trader operation outstanding from as early as the 2016 financial year, the ATO sensationally claimed.

The audit came just as media coverage of Modco Residential — where Mr Khan was the registered builder — started to unravel that company’s troubles.

Mr Khan and wife Cynthia Lu have had a tumultuous year in business.

He had been a director of Library Nightclub operator Perth City Enterprises, which hit the wall in March.

Liquidators reckon the company was bust from 2019, a report filed to the corporate regulator shows.

PCE was hit by a $638,000 statutory demand by the ATO just weeks before its demise.

Plans for the famed Lake Street venue to be revived as Preach Nightclub took a fresh twist in May after an application for a liquor licence was pulled.

Mr Khan and Ms Lu retained a link to the site through Perth City Investments, which is the landlord.

Modco suffered a slow motion failure until the rug was finally pulled in July 2023.

Administrators believed the home builder may have been insolvent two years earlier, according to their report to creditors.

The builder’s official launch in August 2021 featured luxury super cars and the couple were touted as “Perth’s answer to the Kardashians”.

Ms Lu was a director of Modco’s major shareholder and creditor — a company named Ms Lu Holdings.

That business claimed more than half of the $4.4m in debt owed by Modco.

The ATO dropped a bid to prosecute Ms Lu in April.

A spokesman for Mr Khan knocked back questions of the 2023 tax debt and said “the amount outstanding is not $4 million”, claiming the balance was now just more than $12,000.

“There is no $4 million debt linked to Yusuf Khan or otherwise,” he said.

The ATO does not comment on individual cases but said taxes pay for the “services and support that everyone in Australia benefits from”.

“Paying tax in Australia is not optional and our job is to ensure everyone pays the right amount, to the benefit of all Australians”.