Bell Strategies Limited (in administration) · Update on HMRC's enquiries into clients' SDLT Schemes 6 6. Creditors’ Committee 7 7. Investigations 7 8. Pre-administration costs

Bell Strategies Limited

(in administration)

Joint administrators’ final progress

report

15 January 2015

Bell Strategies Limited (in administration)

Contents

1. Glossary 1

2. Introduction 2

3. Administrators’ proposals 2

4. Progress of the administration 4

5. Update on HMRC's enquiries into clients' SDLT Schemes 6

6. Creditors’ Committee 7

7. Investigations 7

8. Pre-administration costs 8

9. Administrators’ remuneration 8

10. Administration expenses 9

11. Outcome for creditors 10

12. Ending the administration 11

13. Creditors’ rights 12

Appendices

I Statutory information 1

II Receipts and payments account to 9 December 2014 2

III Time analysis for the period to 9 December 2014 4

IV Cumulative time analysis 6

V Staffing, charging, subcontractor and adviser policies and charge out rates 7


1

1. Glossary

Abbreviation Description

the Company Bell Strategies Limited

the administrators/joint

administrators

Finbarr Thomas O'Connell and Henry Anthony Shinners

SIP Statement of Insolvency Practice (England & Wales)

IA86 Insolvency Act 1986

If preceded by S this denotes a section number

Sch B1 Schedule B1 to the Insolvency Act 1986

If preceded by P this denotes a paragraph number

IR86 Insolvency Rules 1986

If preceded by R this denotes a rule number

SOA Statement of Affairs

ETR Estimated to realise

HMRC HM Revenue & Customs

QFCH Qualifying Floating Charge Holder – a secured creditor who has the power to

appoint an administrator

H&W, UC, DC Husband & Wife, Unlimited Company, Dual Completion – all SDLT ‘Schemes’

FCA Financial Conduct Authority

Note: The IA86 and IR86 have been subject to a number of significant amendments since their original issue,

including a number of substantial and important changes in April 2010. References to IA86 and IR86 in

this report are to the legislation as it applies to this case.


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2. Introduction

This report is the final progress report in the administration of the Company for the period

from 18 June 2014 to 9 December 2014. It should be read in conjunction with our previous

reports, issued in January 2014 and July 2014. Please refer to section 12 of the report for

further details on the ending of the administration and subsequent conversion to a

creditors’ voluntary liquidation (“CVL”).

By way of reminder, we, Finbarr Thomas O'Connell and Henry Anthony Shinners, of Smith &

Williamson LLP, 25 Moorgate, London, EC2R 6AY, were appointed administrators of the

Company on 18 December 2013.

We were also appointed as joint administrators of the following related companies,

collectively referred to together with Bell Strategies Limited as “the Companies”:

- Inventive Tax Strategies Limited (“ITS”) (24 October 2013)

- Professional Advice Bureau Limited (“PAB”) (3 December 2013)

- Sterling Tax Strategies Limited (“STS”) (18 December 2013)

Statutory information in respect of the Company and the administration is set out at

Appendix I.

The administrators have also made information available on the Company’s website at

www.inventivetax.co.uk. We recommend that creditors refer to this website on a regular

basis for updates.

3. Administrators’ proposals

As previously advised the administrators must perform their functions with the purpose of

achieving one of the following objectives:

1. Rescuing the Company as a going concern; or

2. Achieving a better result for the Company’s creditors as a whole than would be likely

if the Company were wound up without first being placed into administration; or

3. Realising property in order to make a distribution to one or more secured or

preferential creditor.

The objective pursued in this case was the second objective above and our strategy for

achieving this objective was set out in our proposals, which were approved on 7 February

2014 by the creditors, a summary of which is set out below.

1. That the joint administrators continue to manage the affairs of the Company in order to

achieve the objective of the administration.

2. The sale of the Company’s assets be ratified by the Creditors’ Committee (should one be

established) or by the creditors.

3. The joint administrators will consult with the Creditors’ Committee (should one be

established) with regard to the appropriateness of the on-going services of BH Tax

Limited (“BHT”) (the Company’s previous tax advisors) to clients.

http://www.inventivetax.co.uk/


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4. The joint administrators continue to liaise with HMRC in order to convey to creditors

(both actual and contingent) proposals which may be made by HMRC regarding the

settlement of any tax which is deemed to be payable on failed SDLT Schemes.

5. If, having realised the assets of the Company, the joint administrators believe that a

distribution will be made to the unsecured creditors, file a notice with the Registrar of

Companies which will have the effect of bringing the appointment of the joint

administrators to an end and will move the Company automatically into Creditors’

Voluntary Liquidation (CVL) in order that the distribution can be made. In these

circumstances, it is proposed that the joint administrators will become the joint

liquidators' of the CVL and that the acts of the joint liquidators may be undertaken by

either or both of them.

6. Alternatively, the joint administrators may consider making an application(s) to court to

seek permission to make a distribution(s) to the unsecured creditors in the

Administration. If permission is sought and granted, the Company will exit into

dissolution once the distribution(s) has been made and the administration concluded.

See Section 7 below on exit routes from administration for further information on this

process.

7. If the joint administrators think that the Company has no property which might permit a

distribution to its creditors, they will file a notice with the Court and the Registrar of

Companies for the dissolution of the Company. See Section 7 below on exit routes from

administration for further information on this process.

8. The joint administrators shall do all such other things and generally exercise all of their

powers as contained in Schedule 1 of the Insolvency Act 1986, as they consider

desirable or expedient to achieve the statutory purpose of the administration.

9. The joint administrators may continue to investigate the conduct of the Director and any

shadow directors, and continue to assist any regulatory authorities with their own

investigations into the affairs of the Company.

10. The joint administrators may continue to investigate the affairs of the Company and if

appropriate, pursue any claims the Company may have under the Companies Act 1985

or the Insolvency Act 1986.

11. The joint administrators will agree the claims of preferential creditors if it is believed

that there will be funds available to effect a distribution to these creditors.

12. The creditors may consider establishing a Creditors' Committee and if any such

Committee is formed they be authorised to sanction the basis of the joint

administrators' remuneration and disbursements and any proposed act on the part of

the joint administrators without the need to report back to a further meeting of creditors

generally, to include any decision regarding the most appropriate exit route from the

administration.

13. The costs of Smith & Williamson LLP, or any of its associated companies or entities, in

respect of tax and VAT advice to the joint administrators, be based upon time costs and

shall be paid out of the assets of the Company.

14. In accordance with Statement of Insolvency Practice No 9, issued by the Association of

Business Recovery Professionals, the joint administrators be authorised to draw

Category 2 disbursements as and when funds are available, in accordance with their

firm’s published tariff. Details of Category 2 disbursements charged by the firm can be

found in Appendix V.


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15. The basis of the joint administrators’ remuneration be approved by reference to the

time properly spent by the joint administrators and their staff in attending to matters

arising in the administration.

16. The joint administrators be authorised to draw remuneration as and when funds are

available.

17. The joint administrators will be discharged from liability under Paragraph 98 of

Schedule B1 to the Insolvency Act 1986 immediately upon their appointment as joint

administrators ceasing to have effect.

18. If deemed appropriate by the administrators, a Company Voluntary Arrangement (CVA)

may be proposed to the creditors as an exit from the administration.

19. Separately to the proposals, the joint administrators sought and obtained consent to

pay the following pre administration costs of:

£4,166.50 in respect of pre-administration time costs plus disbursements plus VAT for

Smith & Williamson LLP

£2,391.00 plus disbursements plus VAT for Pinsent Masons LLP (Smith & Williamson’s

pre-appointment legal advisers)

£13,000 plus VAT for BHT (for providing support and tax advice for the Company’s

clients) *which was originally paid by ITS and will be apportioned across all four companies

£1,537.50 plus VAT for Entrust IT Limited (for maintaining and providing access to the

Company’s electronic information)

4. Progress of the administration

Attached at Appendix II is our receipts and payments account for the period since 18 June

2014. This account includes cumulative figures for the whole of the period of the

administration from 18 December 2013.

The receipts and payments account also includes a comparison with the director’s SOA

values.

4.1. Realised assets

Since the last report, the joint administrators have realised £180,710 in respect of VAT

recoveries following an application to HMRC for repayment of the VAT element of the fees

charged by the Company relating to SDLT schemes which were deemed by HMRC and the

administrators to have retrospectively failed. As anticipated, HMRC set-off the Company’s

pre-administration VAT, PAYE and corporation tax liabilities, leaving the net balance as

stated above remaining to be repaid. Consequently HMRC no longer has a claim as a

creditor of the Company in the administration. No further VAT recoveries are expected.

4.2. Cash at Bank

Cash at bank of £2,033 was recovered by the administrators.


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4.3. Trade debtors

The director’s statement of affairs, submitted within the administrators’ proposals contained

a number of trade debtors and loans estimated at c. £40k . The administrators are working

with our legal advisors, Pinsent Masons LLP, to investigate the recoverability of these debts

for the benefit of creditors.

4.4. Insurance

Further to substantial investigations by the administrators into the validity of the

Company’s insurance cover, it has been confirmed that the insurer, IICCA, has been

dissolved; therefore no monies will be forthcoming from the insurer in respect of any claim

that may otherwise have been made.

The administrators’ enquiries are continuing with regard to the circumstances of the

dissolution of IICCA, the position of the persons who acted as directors of IICCA, the

position of the brokers and the obligations of the directors and senior personnel of the

Company towards ensuring that adequate insurance cover was in place. These enquiries are

confidential for the time being and the administrators will disclose their findings at an

appropriate time. Should the administrators’ investigations result in a recovery of funds,

they will be apportioned across the Companies, with the Company to receive any recovery

in the liquidation.

4.5. Administration strategy

As outlined in the Proposals, the objective was to fulfil the second purpose of the

administration, whereby the outcome for creditors as a whole is considered to be better

than if the Company had been placed into liquidation.

The initial strategy was to sell the business and assets to Minerva Strategies Limited

(“Minerva”). Negotiations with Minerva were protracted and as time went by we had to

make staff redundant and vacate the office premises. The last employee was made

redundant on 28 February 2014.

During the negotiations, in order to meet staffing costs, office costs and the continuance of

the services of BHT for the benefit of the creditors, funds totalling £47.5k were paid into the

administrators’ bank account by Minerva. A further £36k was paid directly to BHT by

Minerva on the administrators’ behalf. The funds were provided by way of a loan to the

Companies.

The total loan from Minerva, in the amount of £83.5k, has been allocated by the

administrators over all four of the Companies, each of whose creditors have received the

benefit of it.

The Company’s allocation of this loan is to be repaid as an expense of the administration

once there are sufficient realisations to enable this to occur.

The offer to purchase the business and assets of the Company was eventually withdrawn by

Minerva, at a late stage in the negotiations, in February 2014. The principle reason cited by

Minerva for the decision not to proceed with the acquisition was their adverse opinion

regarding the value of the Company’s intellectual property, principally the bespoke tax

planning products.


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The Proposals also summarised the need to retain BHT for an interim period to support

queries from the Company’s clients in respect of their own tax affairs. The administrators

ended this engagement in February 2014.

4.6. Counsel’s opinion on the H&W, UC and DC Schemes

Counsel’s opinion is that the H&W, DC and UC Schemes have little prospect of success in

the courts; an opinion supported by our lawyers, Pinsent Masons LLP. Since these

particular Schemes have not been tested in the courts, there is no absolute certainty that

they would fail, but it is the strong advice of Counsel that they would fail if so tested.

HMRC have also asserted that these Schemes do not have, and never had, any prospect of

success and that HMRC intend to challenge all of the Companies’ Schemes at Tax Tribunal

in circumstances where clients have not reached a settlement with HMRC to pay the tax

and interest due within an agreed timeframe.

Our solicitors support Counsel's conclusion that the H&W, DC and UC Schemes have no

prospect of success. They are of the view that it is abundantly clear from the case law on

SDLT planning that the courts will go to considerable lengths to reach the conclusion that

these Schemes fail. An example of this approach can be found in the case of Vardy where,

although the Tribunal reasoned that superficially the Scheme appeared to work, ultimately

the Scheme was found to have failed on the basis that the Scheme was not correctly

implemented in accordance with company law. Even if Counsel had been optimistic about

the technical merits of the H&W, DC and UC Schemes (which he was not) our Counsel and

Solicitors have doubts that the Schemes were implemented effectively.

Based on this opinion, our legal advice is that the Schemes have failed and therefore, in

accordance with the clients’ Letters of Instruction, the clients are entitled to a refund of the

fee they paid to the Companies.

For the avoidance of doubt, our Counsel’s and solicitors' advice is provided for the benefit of

the administrators of the Companies only. The Companies’ clients are not entitled to rely

on it as being appropriate to their particular circumstances and any clients of the

Companies who require advice specific to their circumstances should obtain their own tax

and/or legal advice.

As outlined in the previous report, the administrators have now raised credit notes to all

those known clients who were sold Schemes, in respect of the fee refunds they were

entitled to.

The administrators do not consider that there are any contingent Scheme creditors

remaining ie they consider that all Scheme creditors are actual creditors of the Company.

5. Update on HMRC's enquiries into clients’ SDLT Schemes

Due to a large increase in calls from creditors, the administrators are aware that demands

for payment of SDLT have now been issued on a widespread scale by HMRC. The

administrators have now received from HMRC a statutory notice which requires the

administrators to provide HMRC with the details of all clients who used these Schemes. Our


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legal advice is that we are obliged to provide this information and we have therefore

complied with the request.

6. Creditors’ Committee

By way of reminder, the constitution of the creditors committee is as follows:

- Garry Moore

- Lisa Moore

- Phil Vandries

The purpose of the Committee is to represent the interests of the creditors as a whole, not

just the interests of the individual members. It may also serve to assist the administrators

generally and act as a sounding board to obtain views for matters pertaining to the

administration.

The Committee is responsible for fixing the administrators’ remuneration and to review the

adequacy of the administrators’ security for the proper performance of their functions.

Members are also permitted to be paid as an expense of the administration any reasonable

travelling expenses directly incurred either by attending meetings or otherwise on

committee’s business.

Full details on Creditors’ Committees can be found in the Statement of Insolvency Practice

15: http://www.icaew.com/~/media/Files/Technical/Insolvency/regulations-and-

standards/sips/england/sip-15-e-w-reporting-and-providing-information-on-their-functions-

to-committees-in-formal-insolvencies.ashx

The constitution of the creditors’ committee will continue unchanged in the CVL.

7. Investigations

Under the Company Directors Disqualification Act 1986 we have a duty to make a

submission to the Secretary of State for Business, Innovation and Skills on the conduct of

all those persons who were directors at the date the Company entered administration or

who held office at any time during the three years immediately preceding the

administration.

We have complied with our duty in this regard. As all such submissions are strictly

confidential we are unable to disclose their content.

Shortly after appointment, we made an initial assessment of whether there could be any

matters that might lead to recoveries for the insolvent estate and of what further

investigations may be appropriate. This assessment took into account information provided

by creditors either at the initial meeting or as a response to our request to complete an

investigation questionnaire.

As outlined in our progress report, our investigations, which are on-going, have included

but have not been limited to, the beneficiaries of the funds extracted from the Company by

http://www.icaew.com/~/media/Files/Technical/Insolvency/regulations-and-standards/sips/england/sip-15-e-w-reporting-and-providing-information-on-their-functions-to-committees-in-formal-insolvencies.ashx




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way of the “management fee” arrangements with the Service Companies and the position

regarding the validity and the veracity of the insurance policies.

Sanction will be sought where appropriate from the Creditors’ Committee in respect of any

subsequent actions that the administrators (and subsequently liquidators) may wish to

pursue.

7.1. Service charge monies paid to the Service Companies

Our primary focus will continue to be the investigation into the payment of c. £231,136 by

the directors from Company funds since 2009 to various Service Companies of which the

directors were the beneficiaries. Total funds paid out across the Companies during this time

amount to some £18.54m.

8. Pre-administration costs

The pre-administration costs were reported in the administrators’ proposals dated 20

January 2014, and subsequently were approved by the creditors’ committee on 13 March

2014.

9. Administrators’ remuneration

The creditors’ committee approved that the basis of the administrators’ remuneration be

fixed by reference to the time properly spent by them and their staff in attending to

matters arising in the administration at the first formal creditors’ committee meeting on 13

March 2014.

The administrators’ time costs are:

Period

Total

hours

hrs

Total

costs

£

Average

hourly rate

£/hr

Fees

drawn

£

18 December 2013 to 17 June 2014 270.60 85,064.50 314.36 65,569.00

18 June 2014 to 9 December 2014 121.35 33,526.40 276.28 0.00

Total 391.95 118,590.90 302.57 65,596.00

Attached as Appendix III, is a time analysis which provides details of the activity costs

incurred by staff grade during the period of this report in respect of the costs fixed by

reference to time properly spent by the administrators and their staff in attending to

matters arising in the administration. Details of work carried out in the period are also

included in the appendix.

Also attached as Appendix IV, is a cumulative time analysis for the period which provides

details of the administrators’ time costs since appointment. A total of £65.569.00 has

been drawn on account of these costs.

A copy of ‘A Creditors’ Guide to Administrators’ Fees’ is available on request or can be

downloaded from the R3 website at the following address:


9

http://www.r3.org.uk/media/documents/publications/professional/Guide_to_Administrators

_Fees_Nov2011.pdf

Details of our charge out rates and policies in relation to the use of staff are provided at

Appendix V.

10. Administration expenses

10.1. Subcontractors

We have not directly utilised the services of any subcontractors during the current period.

However the following costs have been incurred by us as administrators of ITS. These

costs will be apportioned equitably across the four companies once sufficient asset

realisations have been made.

Provider/service(s)

Basis of fee

Arrangement

Costs incurred in

current period

£

Costs paid in

current period

£

Total costs

outstanding at

period end

£

Ana Censi (Assisting

with VAT recoveries

and other financial

matters)

Hourly rate and

disbursements

6,558.25 6,558.25 Nil

Freelance Computers

(website services)

Hourly rate and

disbursements

55.25 55.25 Nil

EntrustIT

IT hosting 1,712.50 1,712.50 Nil

Worldwave

International Limited

(Professional

Transcription

Services)

Hourly rates and

disbursements

562.50 562.50 Nil

10.2. Professional advisers

On this assignment we have used the professional advisers listed below. We have also

indicated alongside the basis of our fee arrangement with them, which is subject to review

on a regular basis.

Name of professional

Adviser

Basis of fee

Arrangement

Costs incurred in

current period

£

Costs paid in

current period

£

Total costs outstanding at period end

£

Pinsent Mason LLP

(legal advice)

Hourly rate and

disbursements

16,838.00 16,838.00 0.00

Legal fees have been incurred with regard to advice and assistance in dealing with the

various SDLT issues with clients, obtaining Counsel’s opinion and with the administrators’

on-going investigations into the insurance policies and other matters which will largely

http://www.r3.org.uk/media/documents/publications/professional/Guide_to_Administrators_Fees_Nov2011.pdf

http://www.r3.org.uk/media/documents/publications/professional/Guide_to_Administrators_Fees_Nov2011.pdf


10

remain confidential. A full breakdown of their time costs has been provided and has been

put before the Creditors’ Committee during subsequent meetings.

10.3. Administrators’ disbursements

Details of administrators’ disbursements that have been incurred and/or paid in the current

period together with the cumulative totals for the period of the administration are set out

below.

Description

Costs incurred in

current period

£

Costs paid in

current period

£

Total costs

incurred

£

Total costs

paid

£

Statutory advertising 75.00 150.00 150.00 150.00

Administrators’ bonds 0.00 140.00 140.00 140.00

Company searches 12.00 12.00 12.00 12.00

Postage 0.00 74.00 74.00 74.00

Miscellaneous 27.52 136.00 163.52 136.00

Storage 0.00 100.44 100.44 100.44

Online reporting 0.00 50.00 50.00 50.00

Total 114.52 662.44 689.96 662.44

10.4. Policies regarding use of third parties and disbursement recovery

Appendix V provides details of Smith & Williamson LLP’s policies in relation to the use of

subcontractors and professional advisers, and the recovery of disbursements.

11. Outcome for creditors

The estimated outcome for each class of creditors is set out below.

11.1. Secured creditors

There are no charges or debentures listed at Companies House, neither are the

administrators aware of any creditors who have purported to hold a secured claim against

the Company.

11.2. Prescribed Part

The Company did not grant any floating charges and hence the Prescribed Part

requirements did not therefore apply.


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11.3. Preferential creditors

There are no preferential creditors.

11.4. Unsecured creditors

We have received claims totalling £370,413 from 34 creditors. Total claims as per the

director’s SOA were £960. The difference is attributable to the number of failed Schemes

and the director’s assumption that the insurance policies would pay out in respect of a

challenge by HMRC.

It is anticipated that realisations will be sufficient to pay a dividend to unsecured creditors.

The dividend will be paid to unsecured creditors in the succeeding CVL and unsecured

creditor claims will be agreed in the liquidation. The amount of the dividend will depend on

the level of recoveries from all lines of enquiry which are ongoing.

12. Ending the administration

Unless extended by application to Court or the creditors, the period of administration is 12

months. The administrators considered that as there is a dividend payable to unsecured

creditors, the most appropriate exit route from administration is to convert to a CVL, an

option that was previously outlined in the proposals. The administrators will automatically

become the joint liquidators, as approved in the proposals. In accordance with P83 of Sch

B1, having filed Form 2.34B with the Registrar of Companies, the administrators were

discharged from liability under P98 (3) of Sch B1 further to their appointment as

administrators ceasing to have effect on 9 December 2014. The basis of remuneration so

agreed under R2.106 will apply to the subsequent liquidation as will the membership of the

creditors’ committee constituted during the administration.


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13. Creditors’ rights

Within 21 days of the receipt of this report, a secured creditor, or an unsecured creditor

(with the concurrence of at least 5% in value of the unsecured creditors or otherwise with

the court’s permission) may request in writing that the administrators provide further

information about their remuneration or expenses which have been itemised in this report.

Any secured creditor, or an unsecured creditor (with the concurrence of at least 10% in

value of the unsecured creditors or otherwise with the court’s permission) may within 8

weeks of receipt of this report make an application to court on the grounds that, in all the

circumstances, the basis fixed for the administrators’ remuneration is inappropriate and/or

the remuneration charged or the expenses incurred (including any paid) by the

administrators, as set out in this report, are excessive.

These rights apply only to matters which have not been disclosed in previous reports.

Further information regarding creditors’ rights is available on application to the

administrators.

Finbarr Thomas O'Connell and Henry Anthony Shinners

Former Joint Administrators

Date: 15 January 2015


Appendices

1

I Statutory information

Relevant Court High Court of Justice, Chancery Division, Companies Court

Court Reference 8801 of 2013

Trading Name(s) None

Trading Addresses London Court, London Road, Bracknell, Berkshire, RG12

2UT

Former Name(s) Kiwi Elephant Limited

Registered Office 25 Moorgate, London, EC2R 6AY

(Formerly London Court, London Road, Bracknell,

Berkshire, RG12 2UT)

Registered Number: 6259199

Joint Administrators Finbarr Thomas O'Connell and Henry Anthony Shinners

both of 25 Moorgate, London, EC2R 6AY

(IP No(s) 7931 and 9280)

In accordance with P100 (2) Sch B1 1A 86 a statement

has been made authorising the Joint Administrators to act

jointly and severally.

Date of Appointment 18 December 2013


Appendices

2

II Receipts and payments account to 9 December 2014

Statement From 18/06/2014 From 18/12/2013

of Affairs To 09/12/2014 To 09/12/2014

ASSET REALISATIONS

VAT Refund 180,710.00 180,710.00

2,097.00 Cash at Bank NIL 2,033.18

40,000.00 Trade Debtors NIL NIL

Bank Interest Gross 24.83 25.01

180,734.83 182,768.19

COST OF REALISATIONS

Specific Bond 140.00 140.00

S&W Pre-Appointment Fees 4,166.50 4,166.50

Joint Adminstrators Fees 76,592.00 76,592.00

Legal Fees 16,838.00 16,838.00

Company Searches 12.00 12.00

Para 51 Creditors Meeting 485.00 485.00

Stationery & Postage 74.00 74.00

Pre-Appointment Legal Fees 2,391.00 2,391.00

Storage Costs 100.44 100.44

Statutory Advertising 150.00 150.00

Online Reporting 50.00 50.00

(100,998.94) (100,998.94)

PREFERENTIAL CREDITORS

Transfer to Liquidation 80,722.85 80,722.85

Transfer VAT to Liquidation 1,046.40 1,046.40

(81,769.25) (81,769.25)

UNSECURED CREDITORS

(960.00) Trade & Expense Creditors NIL NIL

NIL NIL

DISTRIBUTIONS

(2.00) Ordinary Shareholders NIL NIL

NIL NIL

41,135.00 (2,033.36) 0.00

REPRESENTED BY

NIL


(In Administration)

Joint Administrators' Abstract of Receipts & Payments


Appendices

3

Notes and further information required by SIP 7

Details of significant expenses paid are provided in the body of our report.

Details of payments made to sub-contractors are shown in the body of our report.

Information concerning our remuneration and disbursements incurred is provided in the

body of the report.

Information concerning the ability to challenge remuneration and expenses of the

administration is provided in our report.

All bank accounts are interest bearing.

There are no foreign currency holdings.

All amounts in the receipts and payments account are shown exclusive of any

attributable VAT. Where VAT is not recoverable it is shown as irrecoverable VAT.


Appendices

4

III Time analysis for the period

Explanation of major work activities undertaken

A description of work undertaken in the administration to date is as follows:

Administration and planning

This section of the analysis encompasses the cost of the administrators and their staff in

complying with their statutory obligations, internal compliance requirements, and all tax

matters. This work includes the following:

Dealing with routine correspondence

Maintaining physical case files and electronic case details on IPS (electronic case

management software)

Preparation of the joint administrators’ progress report

General case planning and administration

Ensuring statutory lodgement and tax lodgement obligations are met

Regular planning and strategy meetings with case staff including discussing

updates and plans for the case going forward

Meetings with the S&W Forensics department in relation to the investigations

Maintaining and managing the administrators’ cash book and bank accounts

Cashiering duties such as bank reconciliations and paying invoices

Updating the Company’s website to ensure creditors were kept up to date with key

developments

Updates from case staff to the administrators

Classification of work function Partner

Associate

director

Manager/

Assistant

Manager

Senior

Administrator/

Administrator

Assistants &

support staff

Total

hours Time cost

Average

hourly

rate


Statutory returns, reports & meetings 0.00 0.50 10.45 10.50 0.00 21.45 4,839.00 225.59

Initial post-appointment notification letters, including creditors 0.00 0.00 0.00 0.00 0.50 0.50 42.50 85.00

Cashiering general, including bonding 0.00 0.00 0.05 2.40 0.00 2.45 394.00 160.82

Job planning, reviews and progression (inc 6 month reviews and planning

meetings, checklist & diary0.00 3.80 4.85 1.90 0.00 10.55 3,056.00 289.67

Post-appointment taxation (VAT, PAYE/NIC, Corp Tax that are not trading

related)0.00 0.00 0.00 3.15 0.00 3.15 504.00 160.00

Filing - Administration and planning 0.00 0.00 0.00 0.20 0.00 0.20 40.00 200.00

Other 0.00 0.00 6.15 2.50 0.00 8.65 2,152.75 248.87

Investigations

Investigation of legal claims 12.00 1.65 0.00 0.50 0.00 14.15 5,125.15 362.20

SIP2 and SIP4 obligations (inc CDDA86 forms) 0.00 0.10 1.75 0.00 0.00 1.85 579.50 313.24

Asset tracing (e.g. Land Registry and Company Searches) 0.00 0.00 2.50 0.00 0.00 2.50 775.00 310.00

Enquiries of advisers 0.00 0.25 2.00 0.00 0.00 2.25 712.50 316.67

Other 0.00 0.00 1.00 6.85 0.00 7.85 1,680.00 214.01

Realisation of assets

Other 0.00 0.55 27.40 0.00 0.00 27.95 7,937.50 283.99

Creditors

Crown (not RPO etc) 0.00 0.30 0.00 0.00 0.00 0.30 111.00 370.00

Unsecured creditors 0.00 1.90 9.00 5.10 0.00 16.00 4,309.00 269.31

Creditors' committee 0.00 0.50 1.50 1.70 0.00 3.70 922.00 249.19

Total 9.60 9.60 66.85 34.80 0.50 121.35 33,526.40 276.28

Bell Strategies Limited (In Administration)

Breakdown of time spent by Smith & Williamson LLP employees

for the period 18 June 2014 to 9 December 2014

Hours


Appendices

5

Investigations

Interviewing the Director and other parties with regard to the failure of the

Company

Gathering information with regard to the Service Companies, insurance company,

broker and the monies paid to them by the Company. An in-depth investigation is

being undertaken to verify the validity of the insurance policies.

Obtaining legal advice with regard to various investigation matters

Commencing the investigations into the conduct of the director

Investigating the Company’s relationships with its tax and other advisors

Please note that at this stage, I am unable to disclose the full extent of the time spent on

specific investigations, as certain matters remain confidential. I would mention, however,

that all matters in relation to the investigations have been discussed with the creditors’

committee.


This section is in relation to the realisation of the Company’s assets. The work includes

the following:

Discussions with our VAT advisors, HMRC and the Company’s former accountants

in relation to reclaiming the VAT on the failed Schemes

Obtaining advice on whether the SDLT Schemes had failed and therefore

ascertaining the VAT refund on the consequential credit notes; controlling process

of preparing VAT returns/voluntary disclosures; preparing and submitting those

returns/ voluntary disclosures; Preparing for and assisting with subsequent VAT

reviews by HM Revenue & Customs.

Discussions with our corporation tax advisors in relation to a TLR claim

Meeting with HMRC regarding investigations, enquiries and potential settlement for

clients.

Creditors

Work under this section includes correspondence and other contact with the creditors of

the Company. The work includes the following:

Communicating with HMRC regarding Crown debts

Dealing with creditor correspondence via email, telephone and letter.

Uploading and updating creditors’ information on IPS (our computerised case

management system).

Attending to creditor enquiries by phone, email and letter (the Company has

approximately 150 creditors and the volume of communication received has been

extremely high. The London RRS team has been supported by our Bristol office to

assist with the volume of creditor queries.

Correspondence, telephone calls and meetings with introducers (on behalf of

clients who are creditors and also as creditors themselves)

Preparing updates to creditors to be sent by email, letter and/or for inclusion on

the Company’s website.

Meeting and/or calling certain introducers (who mostly were also creditors)

Logging the “consent given” for creditors who wished to be contacted by email

Adjudicating retention of title claims

Organising and holding creditors’ committee meetings

Devising communication process for recording and retaining information sent by clients

regarding their claims.


Appendices

6

IV Cumulative time analysis

Classification of work function Partner

Associate

director

Manager/

Assistant

Manager

Senior

Administrator/

Administrator

Assistants &

support staff

Total

hours Time cost

Average

hourly

rate


Statutory returns, reports & meetings 0.00 3.25 21.85 21.50 0.00 46.60 10,355.50 222.22

Initial post-appointment notification letters, including creditors 0.00 0.00 16.30 3.50 0.50 20.30 4,433.00 218.37

Cashiering general, including bonding 0.00 0.00 0.40 3.05 0.00 3.45 568.00 164.64

Job planning, reviews and progression (inc 6 month reviews and planning

meetings, checklist & diary0.00 7.50 9.85 4.90 0.00 22.25 6,348.00 285.30

Post-appointment taxation (VAT, PAYE/NIC, Corp Tax that are not trading

related)0.00 0.00 0.00 3.70 0.00 3.70 592.00 160.00

Travelling 0.00 0.00 0.45 0.00 0.00 0.45 105.75 235.00

Filing, file and information management 0.00 0.05 0.00 0.00 0.00 0.05 18.50 370.00

Filing - Administration and planning 0.00 0.00 0.00 0.20 0.00 0.20 40.00 200.00

Director/manager review, approval and signing 0.00 0.50 0.45 0.00 0.00 0.95 584.25 615.00

Other 0.00 0.00 15.45 4.15 0.00 19.60 4,626.25 236.03

Investigations

Directors' correspondence & conduct questionnaires 1.00 0.10 0.00 0.45 0.00 1.55 597.00 385.16

Statutory books and accounting records review 0.00 0.00 0.00 0.35 0.00 0.35 70.00 200.00

Investigation of legal claims 83.60 3.10 0.00 0.50 0.00 87.20 41,181.65 472.27

SIP2 and SIP4 obligations (inc CDDA86 forms) 0.00 0.10 1.75 1.50 0.00 3.35 819.50 244.63

Asset tracing (e.g. Land Registry and Company Searches) 0.00 0.00 4.25 0.00 0.00 4.25 1,273.75 299.71

Enquiries of advisers 0.00 0.25 3.00 0.00 0.00 3.25 997.50 306.92

Other 0.00 0.55 1.50 8.85 0.00 10.90 2,426.00 222.57


Debtors not financed (includes reassigned debtors) 11.50 0.00 0.00 0.00 0.00 11.50 5,520.00 480.00

Sale of business as a whole, including liaison with legal advisers agents etc 0.00 0.05 0.00 0.00 0.00 0.05 18.50 370.00

Cash at Bank 0.00 0.00 0.00 0.45 0.00 0.45 72.00 160.00

Other 0.00 6.20 51.25 0.00 0.00 57.45 15,632.75 272.11

Trading

Staff and payroll (inc PAYE/NIC for trading period) 0.00 0.00 0.00 0.10 0.00 0.10 20.00 200.00

Creditors

Crown (not RPO etc) 0.00 0.30 0.00 0.00 0.00 0.30 111.00 370.00

Unsecured creditors 2.75 8.15 29.30 21.75 0.00 61.95 15,387.00 248.38

Creditors' committee 0.00 5.50 8.25 10.90 0.00 24.65 5,858.25 237.66

Distributions for prefs and unsecured 0.00 0.00 0.00 0.00 3.00 3.00 255.00 85.00

Other 0.00 0.00 0.00 2.50 0.00 2.50 400.00 160.00

Corporate Tax

Corporate Tax 0.00 0.00 1.25 0.15 0.00 1.40 205.75 146.96

Total 98.85 35.60 165.30 88.50 3.50 391.95 118,590.90 302.57

Pre-Appointment

AML, Conflict & ethics checks, engagement letters 0.00 0.00 1.25 2.80 0.00 4.05 705.00 174.07

Company searches and background checks 0.00 0.00 0.00 0.45 0.00 0.45 67.50 150.00

General advisory work insolvent 3.50 0.00 0.00 0.00 0.00 3.50 1,680.00 480.00

Appointment formalities 0.00 2.25 0.00 0.00 0.00 2.25 832.50 370.00

Preparation of pre-appointment documents 0.00 0.50 0.00 0.25 0.00 0.75 222.50 296.67

File and information management 0.00 0.00 0.00 1.35 0.00 1.35 207.50 153.70

Filing - pre-appointment 0.00 0.00 0.00 0.25 0.00 0.25 50.00 200.00

Other 1.50 0.00 0.00 0.15 0.00 1.65 744.00 450.91

Total 5.00 2.75 1.25 5.25 0.00 14.25 4,509.00 316.42


Breakdown of time spent by Smith & Williamson LLP employees

for the period 18 December 2013 to 9 December 2014

Hours


Appendices

7

V Staffing, charging, subcontractor and adviser policies and charge out

rates

Introduction

Detailed below are:

Smith & Williamson LLP’s policies in relation to:

– Staff allocation and the use of subcontractors

– Professional advisers

– Disbursement recovery

Smith & Williamson LLP’s current charge out rates

Staff allocation and the use of subcontractors

Our general approach to resourcing our assignments is to allocate staff with the skills and

experience to meet the specific requirements of the case.

The constitution of the case team will usually consist of a partner and a partner or

associate director as joint office holders, a manager, and an administrator or assistant.

The exact constitution of the case team will depend on the anticipated size and complexity

of the assignment and the experience requirements of the assignment. The charge out

rate schedule below provides details of all grades of staff and their experience level.

We may use subcontractors to perform work which might ordinarily be carried out by us

and our staff where it is cost effective to do so and/or where the specific expertise offered

by the subcontractor is required.

Details of any subcontractors’ services during the administration are set out in the body of

this report.

Use of professional advisers

We select professional advisers such as agents and solicitors on the basis of balancing a

number of factors including:

The industry and/or practice area expertise required to perform the required work.

The complexity and nature of the assignment.

The availability of resources to meet the critical deadlines in the case.

The charge out rates or fee structures that would be applicable to the assignment.

The extent to which we believe that the advisers in question can add value to the

assignment.

Disbursements

Category 1 disbursements do not require approval by creditors. The type of

disbursements that may be charged as a Category 1 disbursement to a case generally

comprise external supplies of incidental services specifically identifiable to the case, such

as postage, case advertising, invoiced travel and external printing, room hire and

document storage. Also chargeable will be any properly reimbursed expenses incurred by

personnel in connection with the case.


Appendices

8

Category 2 disbursements do require approval from creditors. These are costs which are

directly referable to the appointment in question but are not payments which are made to

an independent third party and may include shared or allocated costs that can be

allocated to the appointment on a proper and reasonable basis such as internal room hire,

document storage or business mileage.

Since 7 July 2012 Smith & Williamson LLP’s policy is to recover only one type of Category

2 disbursement, namely business mileage at HMRC’s approved mileage rates at the

relevant time. Current mileage rates are 45p per mile plus 5p per passenger per mile.

Prior to 7 July 2012 approval may have been obtained to recover other types of Category

2 disbursements.

Details of any Category 2 disbursements incurred and/or recovered in the administration

are set out in the body of this report.

Charge out rates

A schedule of Smith & Williamson LLP’s charge out rates was issued to creditors at the

time the basis of the administrators’ remuneration was approved.

The rates applicable to this appointment are set out below. Changes to the charge out

rates during the administration were applied with effect from 1 July 2014.

Smith & Williamson LLP

Restructuring & Recovery Services

Charge out rates

London

office

£/hr

Regional

offices

£/hr

From 1/7/13

From 1/7/14

From 1/7/13

From 1/7/14

Partner 480 480 350 350

Associate Director 370 370 295-325 295-325

Managers 235-310 235-310 190-285 190-290

Other professional staff 150-235 150-235 110-170 120-175

Support & secretarial staff 85 85 28-75 60-135

Notes

1. Time is recorded in units representing 3 minutes or multiples thereof.

2. It may be necessary to utilise staff from both regional and London offices,

subject to the requirements of individual cases.

3. The firm's cashiering function is centralised and London rates apply.

1 www.smith.williamson.co.uk

Principal offices: London, Belfast, Birmingham, Bristol, Dublin, Glasgow, Guildford, Manchester, Salisbury and Southampton.

Smith & Williamson LLP is regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International. Registered in England at 25 Moorgate, London EC2R 6AY No OC369871.

Nexia Smith & Williamson Audit Limited is registered to carry on audit work and regulated by the Institute of

Chartered Accountants in England and Wales for a range of Investment business activities. A member of Nexia International.

Documents

Bell Strategies Limited (in administration) · Update on HMRC's enquiries into clients' SDLT Schemes 6 6. Creditors’ Committee 7 7. Investigations 7 8. Pre-administration costs