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Savers face multi-million losses in Sipp biofuel investment

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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.

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Comments

There are 13 comments at the moment, we would love to hear your opinion too.

  1. Not a problem, IFA’s are always happy hand cash to the FSCS to compensate investors

  2. Good point Andy. Why don’t they just tell us where to send our cheques?

  3. All the time the FSCS keeps paying-out, private investors will never learn their lesson….and most likely be tempted again into (being both naive and greedy and) investing into the next “low-risk, high-return” investment scam that lands in the InBox because they will be comforted in the knowledge that the FSCS will bail them out if/when it all goes Pete Tong.

  4. I wonder if the FCA will step in for all the Gulf keystone SIPP Investors, if they go belly up because of the Kurdistan Regional Government withholding money from it ?

  5. Why do people flog this rubbish?

  6. Andy and MiB – aren’t I the smug one now being Restricted – oh hang on they’ll charge me too! £200m as an estimate with £55m in James Hay alone! I’ve never even heard of the investment, if that’s the new polite word for this kind of rubbish. Who on earth was recommending this to clients? How much was paid to the firms recommending it? How many firms? Not only do I have an obvious inferiority complex for my restricted adviser status, but I must be absolutely useless at communicating my messages (it used to be called selling before we all became posh) because I have enough difficulty in convincing new prospects about boring old plain vanilla mixed asset portfolios with 20 year track records. I then hear about these ‘advisers’ who clearly can sell steel to the Chinese. Unbelievable. The whole regulatory system feels like a Ponzi scheme. Can’t help feeling I should have got in at the beginning, you know like the regulators did. Ho hum.

  7. What’s the difference between an old school “Lloyds name” with unlimited personal liability if a disaster strikes and the Financial Adviser community if there are massive losses ????/ ehm!

  8. Oh yes- no “savers” will lose money. Speculators will.

  9. Bethell Codrington 29th October 2015 at 3:38 pm

    TWM Pension Trust invested the entire £3.3m in Elysian via Castle Trust. I wonder how much commission (and I bet there was quite a lot) got paid and to who?
    Dalriada will be able to find this out.
    Lets hope Rebus sues the Trustees of TWM and Castle Trust for gross negligence, fraud or whatever and FSCS does not cough up. Those who sold this junk should be held liable and not the industry in general.

  10. I would be interested to see more about the case of the investor who borrowed to buy the shares then sold to SIPP. Have seen this done before and was never comfortable with it. Main problem was always getting an independent valuation of the shares.

    And this would have been open to only HNW or Sophisticated investors surely?

    The investor in the example wont be covered by the FSCS I would imagine.

  11. Sounds very similar to the FCP Grimsby biofuel BPRA scheme

  12. Gordon Sinclair – I bet he is!
    Andy Evans – the difference is that Lloyds Names receive generous premiums to accept their risks and they have the choice to leave whenever they wish. We get nothing.

  13. ….and still, the regulator fails to act

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