James Hay has vowed to fight any additional cost arising from its sale of Elysian Fuels investments, as total exposure is expected to hit £20m.
The firm’s parent company IFG Group said in a trading update today (2 February) self-invested personal pension James Hay was in ongoing discussions with HM Revenue & Customs over a potential solution to its sale of Elysian Fuels investments between 2011 and 2015.
It had already received assessments for the tax years 2011/2012 and 2012/2013 last May totalling £1.8m, which it appealed.
James Hay estimates the maximum potential sanction charge for the overall 2011-2015 period would be about £20m, assuming all Elysian Fuels shares are deemed valueless at inception.
IFG stated: “Our discussions with the HMRC seeking an acceptable potential resolution of James Hay's inception of Elysian Fuels investments over the overall 2011-2015 period are on-going.
“If the matter is not resolved by the end of March 2018, James Hay would expect to receive further assessments for one or both of the additional tax years.”
It added: “Such further notices of assessment could be materially higher than the initial two years reflecting the volume of business incepted.”
IFG said it was committed to collaborating with HMRC on the matter but would appeal any assessments made by the tax office and, if necessary, take its case to the Tax Tribunals.
It stated: “Based on advice from the group's legal advisers, the directors are confident that the outcome at tribunal and/or any settlement with HMRC would be substantially lower than the maximum potential sanction charge, and would be fundable from the company's cash resources.
“The potential exposure remains uncertain and is expected to remain so whilst discussions with HMRC and/or any Tribunal proceedings continue.”
The self-invested personal pension provider is believed to have about 500 clients invested in the scheme with about £55m.
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.