The Daily Telegraph - Saturday - Money
New tax bill for pod investors
Those who bought storage units for a ‘guaranteed’ return could lose money.
Pension savers who entered a now-closed storage pod investment scheme offering “guaranteed” returns face tax bills that could reach tens of thousands of pounds. The opportunity to buy pods with Store First was promoted in videos by former Top Gear presenter Quentin Willson – himself an investor – and boasted of guaranteed returns of 8pc in the first two years, rising to 10pc in years three and four.
Thousands of people used all or part of their pension savings to buy a lease on pods at one of a number of warehouses, which could then be rented out or sold on for a profit.
Store First has been issued with a winding-up order, which is likely to be heard this year. Meanwhile, investors face uncertainty as to whether they will get any of their money back.
Music producer Dexter Jeffrey bought two pods at Glasgow Airport in 2013 for £15,000, drawn in by brochures that offered a “guaranteed buy-back” option. He received payments worth £1,200 in the first two years, as promised, but the returns then dried up.
Last week, he received an email from Store First informing him that due to a court decision last year he could be liable to pay business rates, which would be backdated.
The Valuation Office, the government department responsible for setting rates, initially assessed Store re First as the liable party, as owner r of the warehouses. In the email mail to investors, Store First said it had been opposing this since ince 2010 and the court decision n established that individual vidual investors should be liable. iable.
Store First said all its investors were told they could be liable for rates, but Mr Jeffrey rey claims this was not made clear to him.
The size of the bills s will be determined by the e “rateable value” of the e pods each investor owns. This is determined by the size of the pods as opposed to the amount invested. Many investors will qualify for small business relief, which could eliminate the charge. But large-scale investors could face huge bills. The tax bill is usually around half the property’s rateable value, so someone with pods rated at £18,000 would have an annual bill of around £9,000. If this is backdated for three years, the total bill will be £27,000. Mr Jeffrey said: “When I stopped receiving payments I thought, worst-case scenario, I can just wait until year five and use the guaranteed buy-back option. I contacted the company and was told this isn’t an option. Now I think I will lose all of the money I invested.” Store First said i it couldn’t comment on the guaran guaranteed exit route as it forms part of o the ongoing winding-u winding-up order. A sales brochure g given to Mr Jeffrey with Store First’s branding explains that in year five Store First Fi Management Ltd will wi buy the pods back for the th original price on requ request. In an email to Mr Jeffrey, Jeffr Ruth Almond, a director dire of Store First, told him she cannot comment com on this option but said the salesman Mr Jeffrey spoke to “no longer works for the company”.
In a statement to Telegraph Money, Ms Almond said: “The Valuation Office erred in law by assessing rates due by referencing the entirety of our storage facilities. On professional advice, we challenged the basis of this assessment.
“Investors were indeed notified of the proceedings and the hearing date and were invited to make representations. The investors bought long leases of storage pods. Tenants, rather than landlords, are usually responsible for the payment of rates and that was the case here. The lease makes it abundantly clear that the investors are responsible for the business rates in respect of their pods. There is no basis to allege that investors were misled.”
Last year, the Insolvency Service filed a petition to wind up several arms of Store First’s businesses. Store First is fighting the petition.
The investment opportunity was advertised by Store First in 2011 using videos featuring Mr Willson. He said that as soon as he became aware of “consumer issues” surrounding Store First he took legal action to prevent his image being used and also contributed to a BBC Radio 4 programme on it.
He added: “I was misinformed like everyone else, having been shown evidence that this was a bona fide investment before agreeing to present their online video. I too have a store pod that could be worthless.”