Self-invested personal pension provider James Hay is facing a £1.8m charge from HMRC, over investments in an unregulated biofuel scheme.
In a statement published today (9 May), James Hay parent group IFG announced HMRC has launched an investigation into Elysian Fuels, held by some investors through their Sipps, including 500 James Hay clients who invested around £55m in the scheme.
James Hay has received, in April 2017, assessment notices for sanction charges from HMRC for the tax years 2011 to 2012 and 2012 to 2013 in total for £1.8m in relation to Elysian investments.
The Sipp provider has appealed these charges and is in ongoing discussions with HMRC.
Elysian Fuels was sold as a scheme investing in renewable energy projects in the UK and the US, including in 2013 the launch of a bioethanol plant in Grimsby.
About £200m was invested in the scheme - which was marketed as suitable for experienced investors only, with a minimum investment of £50,000.
As much as £180m is believed to have been invested via Sipps, with provider Rowanmoor also having some clients with money in the scheme.
Elysian investors face heavy losses after Future Capital Partners (FCP), which sold and marketed the scheme, cut the value of the shares in the scheme from £1 each to zero in October 2015.
Elsewhere in today’s update on IFG’s performance in the first quarter of the year, to 31 March, the company reported assets under administration in James Hay increased to £23.3bn, up from £22.1bn in December, with inflows of £0.8bn.
New clients in James Hay of 1,600 were 45 per cent higher than 1,100 in the same period in 2016.
The company stated that the lowering of the UK base rate in the third quarter of 2016 impacted James Hay revenues and profits in the first quarter of 2017 by £1.6m, compared to the first half of 2016.
Pricing changes will take effect in the second half of this year, which the company projected will lead to an improved revenue and operating margin.
Also under the IFG umbrella is advice firm Saunderson House, which reported an increase in assets under advice to £4.7bn, up from £4.7bn in December.
Saunderson House now serves 2,017 clients, up from 1,956 in December, with new client wins in the first quarter of the year of 86.
The company stated clients numbers had been bolstered by the success of its new discretionary management service, which is attracting a broader range of clients to Saunderson House.
John Cotter, IFG group chief executive, said: "Changes to interest rates in 2016 impacted the Group revenue trajectory and masked the underlying performance of the business short-term, but this is being mitigated whilst we continue to drive improvements to our propositions and operating capability.
“The cost base in James Hay will normalise in the second half of 2017, as we see the benefits of the efficiency gains from the investment spend. We expect both businesses to continue to grow, and the changes we have made will deliver, from H2 2017, improved underlying financial performance."