Friday 9 December 2022

Tax Man Seeks US$20 Million From Collapsed Costa Rican Scheme

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9 December 2022 - At The Banks - BCCR

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More than 3,000 investors in a troubled unregulated investment scheme based in Costa Rica face a lengthy wait to find out if they will lose money. Photo for illustraive purposes
More than 3,000 UK investors in a troubled unregulated investment scheme based in Costa Rica face a lengthy wait to find out if they will lose money. Photo for illustrative purposes

(Q24N) The liquidator of four UK-based companies, one of which promoted investments in Costa Rica and ran an ethical investment scheme has told investors that HM Revenue & Customs (HMRC) believes the companies owe it over US$20 million dollars.

The Ethical Forestry group promoted investments in Costa Rican tree plantations.

At least 3,300 UK investors are thought to have invested a minimum of  US$26,000 dollars each into the scheme.

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The UK group was split into four companies; Ethical Forestry Limited, Ethical Forestry Holdings, EF Forestry Management Limited, EF Sales and Marketing Limited. In January the firms appointed HJS Solutions as a liquidator.

An email sent to investors in the scheme from liquidator Shane Biddlecombe, seen by Citywire, said HMRC believes the four companies owe it US$20 million dollars.

‘At the outset of the liquidation, I was informed by the directors of the companies that the only creditors were themselves. I have acknowledged their claims, although I have not accepted them at this stage,’ he wrote.

‘Subsequently, I have been in discussions with HMRC, who indicate that they consider themselves to be a creditor for in excess of US$20 million dollars.’

Biddlecombe told Citywire it was normal practice for HMRC to look into insolvent firms, but this could pose a ‘significant liability’ for the tax man to claim.

‘What we are trying to do is mitigate any liabilities for all parties. In every insolvency scenario, HMRC always has lots of queries over their liability. In this case the liability is significant for them, so they want to know if there has been any wrongdoing and if so it’s likely they will also take action,’ he said.

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A spokeswoman for HMRC said the body did not comment on the identity of cases it is involved in.

Investor concerns

The reported debts to HMRC raised further concerns from investors over how the businesses were run.

According to a report on BBC Radio 4’s Money Box, the firm paid its three directors US$5.6  million in 2014 and US$14.9 million in 2013. Documents filed at Companies House showed these payouts came as the firm’s revenue fell from £28 million in 2013 to US$40 million in 2014.

Investors in the scheme have raised concerns in online forums about the amount of money the directors received before the companies entered liquidation.

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Stephen Smith, an investor who founded a forum and Facebook page of other investors, told Citywire he wanted to see more action from those who have been affected. He encouraged investors to join the forum he has set up and to write to the regulators outlining what has happened to them.

‘I want them to get involved and to work with the people on the forum to take action to get the authorities to investigate the actions of the business,’ he said. ‘I want them to take action because our pensions and savings are at risk and if we are not going to do something about it, who will?’

Smith has written to the Serious Fraud Office (SFO) about the companies and encouraged other investors to support him. A letter from the National Fraud Intelligence Bureau (NFIB) told him the complaint would be ‘assessed’ but the body could not comment if any further action would be taken. The SFO declined to comment.

Source: Citywire.co.uk

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Q24N is an aggregator of news for Latin America. Reports from Mexico to the tip of Chile and Caribbean are sourced for our readers to find all their Latin America news in one place.

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