The newly appointed permanent chair of banking giant HSBC was an investor in a failed tax-avoiding investment scheme that collapsed after a biofuel venture turned sour, an investigation can reveal.
The Failed Biofuel Investment
Brendon Nelson, who took up the role at HSBC earlier this month, was a partner and investor in a company named Future Fuels. This firm was part of a larger, unregulated scheme called Elysian Fuels, operated by Future Capital Partners.
The scheme targeted retail investors through wealth managers, promising a potential fivefold return on initial capital. A key selling point was the minimisation of tax liabilities via capital allowances.
It successfully attracted hundreds of participants, raising tens of millions of pounds with individual investments often exceeding £100,000. However, company filings show Future Fuels was wound down in 2017 after a biofuel venture it backed failed, rendering its assets worthless.
HMRC Crackdown and Liquidation
The scheme's promoter, Future Capital Partners, has also been liquidated. This followed a ruling by HM Revenue & Customs (HMRC) against another of its tax avoidance schemes, called Eclipse, which did not deliver the promised tax reliefs.
At the time, former exchequer secretary David Gauke warned: “We will not stand for abuse of those reliefs and HMRC will come down hard on anyone who tries. In this case, anyone who used the scheme to try to avoid tax will have to pay tax on the income from the scheme, meaning they are worse off than if they’d never used it.”
HMRC investigated the Elysian scheme's tax avoidance strategy and challenged individual Future Fuels investors over their tax treatment. The collapse led to numerous complaints to the Financial Ombudsman, and some promoting wealth managers were later banned by the Financial Conduct Authority.
HSBC's Statement and Nelson's Role
In a statement, HSBC said: “Mr Nelson invested in Future Fuels when it was seen as a legitimate investment. When the commercial rationale was challenged by Inland Revenue, Mr Nelson repaid the tax benefit received and resigned from the partnership.”
Nelson, a former senior partner at KPMG, is widely seen in the City of London as a caretaker chairman for HSBC. Due to his age, many observers believe he will not complete his full nine-year term.
The revelation highlights the personal investment risks taken by senior financial figures and the ongoing consequences of participation in aggressive tax planning schemes that are later challenged by authorities.
