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James Hay faces £1.8m tax charge over biofuel investment

Pension provider in dispute with HM Revenue & Customs over tax relief paid over failed biofuels company Elysian Fuels.

James Hay faces £1.8m tax charge over biofuel investment

Pension provider James Hay is facing an HM Revenue & Customs tax charge of £1.8 million over failed biofuels company Elysian Fuels.

Elysian Fuels was a specialist investment company listed on the Channel Islands Stock Exchange that had been set up by a promoter of film schemes to put money into biofuel refinery projects. It marketed returns of up to 10 times the original investment over eight years.

The company is what City regulators call a 'non-standard' investment in that its assets could not be easily sold in 30 days and a daily valuation of their price was not possible.  

In 2015 the Daily Telegraph reported that the value of the Elysian Fuels scheme had been written down to zero. HMRC has been concerned about tax relief claimed by investors who put their shares in their self-invested personal pension (Sipp).

In an interim trading statement today by its parent company, IFG Group (IFP), James Hay said it had 500 clients who had invested around £55 million in Elysian Fuels and that HMRC is investigating this scheme.

‘HMRC is investigating a non-standard investment known as "Elysian Fuels", which was a structured investment in biofuel businesses initiated between 2011 and 2015, an equity component of which was held by some investors through their Sipp. Some of these investors are clients of James Hay,’ the results said.

The firm added it was now appealing a tax charge from HMRC over this investment.

‘James Hay did not advise investors in relation to these investments; it acted solely as pension administrator. James Hay has received, in April 2017, assessment notices for sanction charges from HMRC for the tax years 2011/2012 and 2012/2013 in total for £1.8 million. These have been appealed and are the subject of ongoing discussions with HMRC.’

The firm added that it ‘acted appropriately’ but said the effects of HMRC’s action are not known at this stage.

‘The extent of any ultimate exposure to the group is uncertain at this stage, and may in any event be mitigated by indemnities available to us. Sanction charges can be levied by HMRC on Sipp providers where there is deemed unauthorised payments, the amount of which is dependent upon the individual circumstances of each investor,’ the firm said in the results.

‘We believe James Hay acted appropriately and in accordance with its clients' instructions in relation to these investments. We will be incurring ongoing legal costs in relation to this issue.’

Earlier this year James Hay announced it was stopping future non-standard investments because of a lack of demand from investors and financial advisers. New capital adequacy rules last year mean Sipp providers have to increase the size of their  reserves if they do business with non-standard investments.

3 comments so far. Why not have your say?


May 09, 2017 at 15:49

Both film schemes and biofuels have been taken advantage of by tax dodgers.

report this

chris kinnersley

May 09, 2017 at 17:42

Ask Drax, and see if they agree ?????

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May 09, 2017 at 18:00

Yes they should, they receive hundreds of millions in tax subsidies. Burning wood pellets at Drax has proved to be as polluting, releasing as much CO2 and as environmentally unfriendly as coal fired power stations.

It's really little difference if you buried the wood pellets and used coal or just used coal. It's only technicalities that allow it to be called zero carbon emissions. Transporting the wood pellets from North America is not environmentally friendly either..

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