The £4,000 tax refund that was worth nothing

Probes a world of scams and scandals

J.G.M. writes: I dealt with Mis-sold Shares Limited, which recovered money for me from the Financial Services Compensation Scheme. I then received a brochure from Leadenhall Tax Rebates, based at the same address, offering help in claiming tax relief for share investments that have become of little or no value. I sent paperwork that Leadenhall requested and received a tax refund of more than £4,000, but now the tax office says this was a mistake and it wants the money back. Leadenhall has not replied to letters. LEADENHALL Tax Rebates was a name used by a company called Admin and Processing Services Limited. Its owners put it into voluntary liquidation in January last year, which is why your letters were not answered.

The boss was Neil Hackley, 55, from Horsham in West Sussex, and a former director was Ian Farrell, 52, also from Horsham. Farrell is also a director of Mis-sold Shares.

According to the brochure you received, Leadenhall made some pretty blunt claims. It says: ‘You can reclaim your investment losses against your tax.’ It boasted: ‘Our team of tax specialists, lawyers and accountants bring together a unique fusion of skills and knowledge within their respective fields to combine them into a highly qualified and successful team.’

It asked: ‘Do you currently hold small company shares? Have those shares become of little or no value? Have you paid income tax in the last four years?’ Answer yes and Leadenhall held out the prospect of a tax refund within three months.

You certainly seemed to qualify. You had bought shares through dodgy stockbroker Wills & Co, which featured regularly in The Mail on Sunday until it closed down in the face of fines for ripping off clients.

Your portfolio included shares such as Eirx Therapeutics, a medical business based at the Cork Airport Business Park in Ireland. It went bust and you lost every penny. Despite this, you were not entitled to tax relief. This was only due if you had bought shares by putting money straight into the company and not through a broker who got them from an earlier investor. The best you could hope for would be to set losses against any future gains, reducing your possible capital gains tax bill.

So how come you received a refund? The answer is that the Revenue operates a ‘process now, check later’ system. When Leadenhall filed your claim, your refund followed quickly and the claim was checked afterwards. Leadenhall pocketed more than £1,300 in fees from you and then closed down, leaving you to face the eventual demand to hand back more than £4,000. The mystery is why all those experts failed to spot that not a single one of the dozens of shares you held could ever qualify for a refund.

I asked Neil Hackley and Ian Farrell to comment, but neither did. Both are known to me though. Hackley was a director of Midas Commodities Limited, which marketed investments in diamonds and art. It was compulsorily struck off soon after he stood down as director. Farrell has been on my radar since the 1980s for his links to a long list of suspect investment companies.

Should the taxman issue refunds before full checks are completed? Lots of people would say yes, as they want their money sooner rather than later.

But there is no argument over Leadenhall’s responsibility. It filed dud claims, pocketed a hefty fee and then walked away, leaving you to pick up the pieces.

Perhaps the Insolvency Service should take a close look at the company and the people behind it. If you believe you are the victim of financial wrongdoing, write to Tony Hetherington at Financial Mail, 2 Derry Street, London W8 5TS or email tony.hetherington@ mailonsunday.co.uk. Because of the high volume of enquiries, personal replies cannot be given. Please send only copies of original documents, which we regret cannot be returned.