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Compliance experts warn claims firm EIS promotion breaches FCA rules

Claims firm Rebus is looking to raise £2m in anticipation of increased demand for its services following new HM Revenue & Customs powers to claim disputed tax.

But compliance experts have questioned whether a promotion for its enterprise investment scheme breaches FCA rules.

In an “investor alert” email last week, Rebus says HMRC’s more aggressive stance in tax disputes has led to “significant growth” in its business.

When the 2014 Finance Bill is given Royal Assent later this month, HMRC will begin issuing demands to pay tax within 90 days to tens of thousands of individuals. It can issue a notice to anyone who has used a tax avoidance scheme into which it has an open inquiry.

Rebus says it expects demand for its services to “increase exponentially” as a result, and is looking for a £2m investment through its EIS.

It says: “Rebus is offering projected returns of up to eight times investment within four years. The minimum investment of £25,000 would project a return of £200,000.”

The email then lists six points under the heading “the benefits of investing now”, but fails to include any risk warnings.

The FCA says financial promotions must be clear, fair and not misleading, and must not emphasise benefits of an investment without indicating the relevant risks.

Where information refers to tax treatment, the promotion must state that this depends on the circumstances of the client and may be subject to change in future.

Independent compliance consultant Adam Samuel says: “This does not look like it has been compliance checked and is hopelessly unbalanced.

“There is no disclosure of the risks involved and no tax warning.”

A spokesman for Rebus says its investor alert is a free email service for those interested in Rebus’ activity and subscribers are not vetted.

He says: “No person is able to receive investment materials without requesting information from Rebus and following regulatory checks.” 

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. ConcernedObserver 10th July 2014 at 11:54 am

    I actually received a copy of this communication and thought it was fairly informative and to the point. If I’m to believe the recent press on tax avoidance schemes 8x seems fairly low key so I’m surprised this ‘story’ is being qualified as news-worthy. I think the real question is should we even be investing or recommending EIS now with HMRC’s retrospective action? What’s next, ISA’s, Pensions?

  2. I actually received a copy of this communication and thought it was fairly informative and to the point. If I’m to believe the recent press on tax avoidance schemes 8x seems fairly low key so I’m surprised this ‘story’ is being qualified as news-worthy. I think the real question is should we even be investing or recommending EIS now with HMRC’s retrospective action? What’s next, ISA’s, Pensions?

  3. I’m raising £2m for an EIS which will file claims against Rebus on behalf of investors who invested in their EIS and then lost money, on the grounds they weren’t warned that EISs aren’t the same as deposit accounts. I expect demand to be exponential, arithmetical and generally supercalifragilisticexpaliadocious, and that everyone will get ten times their money back and that nothing can possibly go wrong, probably.

    Roll up! Roll up!

  4. There are strict rules for investment promotions. Rebus should, surely, both know that and be aware of the vulnerability involved with not satisfying regulatory rules.

    When an EIS is involved, it is even more important than say a deposit account, too.

    There are also rules where offers of shares are involved by the ‘host’ rather than a simple ‘investment’ promoted by others.

    Of course, there could be many who perceive it is an unethical investment anyway – also, why do they need the money – and if the concept is such a milch cow, why are they selling equity in it when they can keep all the spoils just for themselves if it’s that good…!

    Physician, heal thyself – or quietly disappear into oblivion.

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