Sipp investors are facing millions in write downs on a high risk biofuel investment, which has also been linked to a suspected pension liberation scam.
HMRC has written to Sipp providers who may have allowed customers to buy shares in Elysian Fuels, which owned a bioethanol plant in the US and a renewable fuels refinery in the UK.
It is understood HMRC is asking providers to confirm the names of clients invested in Elysian and details of transactions.
Money Marketing understands the value of the investments, which were structured into fund raising tranches, have been cut to nil because of a series of issues including falling oil prices and the sale of a plant in Virginia.
Sipp providers James Hay confirms its clients have invested £55m in Elysian, while Rowanmoor says it permitted investment for a short time but would not specify an amount.
In addition, in 2013 The Pensions Regulator appointed Dalriada as independent trustee of the TWM Pension Trust. Almost the entire £3.3m invested in the scheme was placed with Castle Trust which in turn placed the funds in Elysian.
A Dalriada note says: “Dalriada considers the investment in Elysian Fuels high risk and inappropriate, particularly given the fact that the vast majority of the scheme’s funds have been placed in this one investment.
“We are concerned that the investment will have little or no value ultimately which will impact greatly on the value of members’ benefits.”
Professional services firm Rebus is acting on behalf of several clients who are set to lose out. It estimates around £200m was invested in Elysian.
In one case an investor bought £200,000 worth of shares – paid for with a £166,800 loan – and then sold the shares to their pension. HMRC is understood to be considering making a 55 per cent tax charge on investors in this situation, which could rise to over 100 per cent of funds after penalties are applied.
An HMRC spokesman says the tax office does not comment on identifiable cases.