James Hay parent issues profit warning as HMRC dispute continues

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James Hay and Saunderson House parent IFG Group has warned of lower annual profits due to the “exceptional costs” of an ongoing HM Revenue & Customs dispute and the restructure of James Hay.

The company is in discussions with HMRC about potential sanction charges related to unpaid tax on bio-fuel scheme investments. A trading update says the financial impact to the business will not be clear before it announces its interim results on 30 August.

In May it came to light that, through Sipps provided by James Hay, around 500 clients put £55m in Elysian Fuels, whose investments included a bioethanol plant in the US and a renewable fuels refinery in the UK.

While James Hay did not advise investors and limited its role to pensions administration, in February it was sent sanction charges by HMRC totalling £1.8m for the 2011/12 and 2012/13 tax years.

According to the update, the IFG Group board yesterday approved to speed up the restructuring programme for James Hay, which is expected to cut costs in the business.

However, it said this and the HMRC dispute would lead to “exceptional costs” in 2017.

The update says: “The level of exceptional costs that will be incurred in 2017 is expected to increase materially, which will lead to reduced statutory profits for the group.

“We believe this is the correct course of action to firmly position the company to deliver meaningful profit growth in 2018.”

The trading update says so far in 2017 James Hay and wealth manager Saunderson House have seen assets under advice increase to more than £29bn, an increase from £24.4bn in the first half of 2016.

IFG Group chief executive John Cotter says:We are focused on resolving the legacy issues within James Hay, which are distracting from the strong underlying performance of the businesses.”