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HMRC tax bill caused Keydata administration

A large tax bill from HM Revenue & Customs was the cause of Keydata’s insolvency, Money Marketing can reveal.

It is understood that the bill, thought to be at least £5m, is down to the fact a number of its defined income plans were not properly incorporated in Luxembourg five years ago. The plans were sold through Isas and as they were not incoporated properly HMRC demanded the tax due.

HMRC is understood to have concluded that as investors went into the plans in good faith they should not pay the bill and instead it should land with Keydata.

PricewaterhouseCoopers has since revealed that a number of Keydata products may not comply with Isa regulations. These include the secure income bonds issues 1-3 and the defined income plans 1-8.

The administrator says that liabilities arising due to non-compliance issues associated with these products is one of the factors which has led to the application by the FSA for the appointment of administrators.

HMRC was in talks with Keydata regarding the bill when it is understood that the FSA halted negotiations and forced the firm into administration on the grounds of insolvency.

A source close to Keydata told Money Marketing yesterday that the firm offered the FSA an alternative route which was rejected.

Keydata was unavailable for comment.


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. HMRC
    why on earth does HMRC/FSA think it is in ‘good faith’ to potentially expose these same consumers to not having any of their money [in the short term or permanently] by putting Keydata into administration ??

  2. HMRC and FSA face off
    So we know add a clause to my recommendations letter saying that if the FSA and HMRC cannot agree on something then it is not my fault as the adviser if they pull the plug on our business. Talk about creating uncertainty in financial markets. Not very thought out this one chaps – well done. More hysteria comng…..

  3. Richard Arnold 9th June 2009 at 3:06 pm

    If the events reported and unfolding are correct, then shame on both the FSA and HMRC for not being able to secure an outcome for KEYDATA and their investing clients that is imaginative and resonate with recent events and extra ordinary treatment of banks by the Government. This should be investigated independently to ensure that Regulation,initiative and common sense have been applied to ensure an outcome that meets the best interest of the consumer. This is the primary responsibility of the FSA.

  4. Keydata
    Another case of the FSA being totally out of touch with reality. What useful purpose does thier action to force Keydata in to administration serve? Could we ask for a suitability report from the FSA for a change that would make interesting reading!

  5. FSA & Keydata
    Is this an example of the FSA treating customers fairly???

  6. Keydata
    Just another example of a totally incompetent Revenue and FSA, they are interested in one thing, furthering their own carers and causing the general public as much hardship as possible (well that’s two things but with the FSA they would adjust it to one, and then fine someone for not selling it as two in the first place.)
    In particular the FSA couldn’t have made a bigger shambles of the financial services industry if they had tried, they should all think long and hard about the contribution they have actually made to the country in which they live and maybe leave it immediately and give all the hard working descent people a break.

  7. I agree with the four post below
    It would be nice to see the FSA produce a Reason Why Report or be required to for tis intervention. they may well have done the right thing and hopefully we will get the truth in the meantime, but on the surface it looks like a case of rules overriding common sense and principles.

  8. What is the FSA for?
    I seem to recall that one of the four reasons for the existence of the FSA was to promote public confidence in financial services. Of course we now kow that its prime objective is to provide career paths for failed bankers and to provide its own staff with benefits unseen in the rest of the industry. How far would the latest FSA bonus scam have gone in meeting the tax bill? What a scanda! The directors’ own remuneration is also hardly defensible in the light of their obvious incompetence. Is there anything or anyone that an IFA can rely on today? Oh Yes any bank with pals at the FSA and Treasury when a trifling £5million is small change.

  9. I wsa sold the key data secure income plan issue 7 as safe investment and risk free ISA.

    It potentially turns out that neither maybe the case. Unfortnately my wife and I have invested £24k in this plan which we think is a reasonable large investment.

    The whole thing seems a sham – how can FSA , the IR, be making such a mess, how can a company launch ISA’s and then the IR potentially say they do not qualify after 2 years.

    I don’t think I believe a word from anyone anymore – put under the mattress seems a good bet

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