I smell a rat

money rat

Keep this guy away from your dosh!

Maybe it’s the cynic in me, or maybe my natural in-built auditor, but it seems to me that dodgy investments and tax schemes are on the increase.

One reason for this may be the fact that our authorities continue to be particularly lenient to companies which make promises, collect cash, fail to deliver and then are liquidated (or just disappear), only to reappear in a similar form and under a new name shortly afterwards, while the creditors receive nothing or only pennies in the pound.

Another reason is that there is just too much fraud around, and the country’s fraud squads are spread far too thinly.

Sometimes downright fraud is at the core of the issue, but there are varying degrees.  There seem to be quite a few who carry on in this manner who have a nose for what they can get away with, just about staying within the statutes or knowing how to work the areas that simply aren’t enforced. Either way these people are duplicitous and acting without any level of integrity.

Sometimes, as an independent financial adviser, I am feted by some pretty dodgy looking companies to act as an introducer of clients to them. This is usually by way of an email, and often  the company has a very impressive website. The promoters, who make much of the introducer commissions they offer,  may be pushing unregulated investments, such as property developments (particularly holiday property overseas), or maybe tax schemes  – particularly for persons contracting through their own limited companies, and so on.

Occasionally, the business and its product are bone fide, but nevertheless non-mainstream and requiring significant due diligence from anyone who might recommend or otherwise promote them. Frequently they are not.

So can I make a few basic recommendations here? (spot the over-used old sayings):

  • With only a very small number of exceptions (linked to the UK Treasury or National Savings and Investments), there is no such thing as a guaranteed return on an investment. 
  • If you are a UK contractor and are encouraged to join a scheme that involves any kind of offshore trust, loans back to you personally, gifting of income or invoicing an unrelated entity, it will almost certainly fail as and when it comes under HMRC’s spotlight. This is likely to have very serious implications, and additional costs to the contractor. Occasionally, you end up with a very large debt due to the offshore company involved too. Avoid these schemes. If you are a UK contractor and want to minimise your tax bill, come talk to me for sensible tax advice.
  • There are no free lunches!
  • If you are contacted by anyone who is promoting any kind of investment product which they profess to be either a hot stock, something with guaranteed returns, low risk and high returns, or whatever, agree to nothingAlways always run it past a trusted professional such as your independent financial adviser. But before you even do that, try asking some common sense questions of that person and write down the answers so that you can check their story. What is the full name of the individual calling and of the company which they are a part of,  where does it have its office address and what is its telephone number? You can easily check the existence of a UK company at companies house online, and it is even operating a free documents service at present allowing you to look up the directors and officers, and even look at the accounts of the company. By clicking on the directors names, you can see other companies with which they are connected. This is my first port of call in any basic due diligence.
  • And never never never agree to pay money over the telephone for anything. There are some very persuasive people out there with some very clever, well honed stories to tell. Assume it is dodgy. One may not be able to prove it is dodgy, indeed maybe no investors have been screwed (yet), but if it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.  

Of course, there can be exceptions to anything and occasionally a tax scheme or unregulated investment promoted direct that initially seemed dodgy can be a pretty decent proposition to certain people at certain times. But in all cases I would recommend you keep your chequebook in your pocket until you have spoken to a seasoned professional adviser. There are a host of excellent investment opportunities out there and a good investment adviser will be able to help you find the appropriate investments with which to populate your portfoli, which carry a suitable amount of risk in line with your requirements and achieve your objectives.

Now I really must get on. Apparently I’ve won the Nigerian lottery (!), and I need to sort out a rather complicated claims process……………….



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