Tax probe into green energy scheme that lured string of celebrities
Bear Grylls among biofuel backers
THE taxman is investigating a controversial green energy scheme that attracted backing from a host of celebrity investors.
TV adventurer Bear Grylls, football manager Rafael Benitez and snooker legend Stephen Hendry are among the famous names who invested in the project on the expectation of lucrative returns and tax breaks.
The original plan – given planning consent five years ago – was to build a £200million biofuel refinery in Grimsby that would provide local jobs and boost the economy. But the refinery proposal has since been shelved, and a ‘technical centre’ promised instead on the site is yet to open.
Questions about ‘tax avoidance’ are being asked as generous tax allowances have still been available from the UK Government to the rich investors despite the company effectively switching its operations to the US.
The only bioethanol refinery to open has been on the other side of the Atlantic.
Concerns have prompted HM Revenue and Customs to launch an inquiry. Officials are expected to look at whether tax allowances linked to ‘clean’ fuel production have been unfairly exploited.
There is no suggestion any of the celebrity investors have acted inappropriately.
The specialist finance firm behind the complex biofuel project is Future Capital Partners (FCP), which ran a string of movie-investment schemes that have since been ruled illegal.
The inquiry may now consider if similar rulings are appropriate for this latest venture.
The Government wants to encourage producers of environmentally-friendly fuels to help
‘A minimum £50,000’
the economy become less reliant on oil. Bioethanol – now added to all petrol and diesel – is made by fermenting wheat. Tax allowances have been made available to people who invest in plant and machinery dedicated to the production process.
In 2010 Yorkshire-based company Vireol won planning permis- sion to build a bioethanol refinery on a 44-acre vacant industrial site on the edge of Grimsby. It teamed up with FCP to raise funds.
Another company, Future Fuels, was created and advertised to wealthy people interested in investing a minimum £50,000.
With enough cash raised, a mothballed US bioethanol factory in Hopewell, Virginia, was bought for £8.4million in March 2013, triggering tax discounts for investors in the UK.
The original plan was to move plant machinery over to Grimsby. But months later there was an unexpected twist.
The plans for Grimsby were suddenly scrapped, with Vireol blaming EU regulations. Instead, the US plant was reopened and began churning out bioethanol last year, backed with subsidies from the American taxpayer. Vireol then announced a Plan B to build a £5million technical centre by the end of 2015 at the Grimsby site for research and development.
FCP promised more tax breaks for investors as Government rules allow discounts for turning derelict buildings into offices in disadvantaged areas.
Ged Russell, technical director of Vireol, confirmed last week the centre was not yet open but denied the hold-up was connected to tax inquiries.
FCP’s latest update to investors in January stated HMRC had launched an ‘enquiry’ into Future Fuels. An HMRC spokesman said it did not comment on identifiable taxpayers.
Representatives of many of the celebrity investors did not respond to requests for comment.