Illiquid shares in a SIPP

BrianHenry

I have just retired and I will need access to all my pension funds.  Some years ago I opened a SIPP and one of the investments I chose was a company, then listed on AIM, that has since de-listed and now has no market for its shares.  The latest set of accounts shows negative net assets so I'm fairly sure the shares are worthless.  That is not a major surprise to me but what is a surprise is that this is stopping me from closing the SIPP.  The SIPP provider is insisting on continuing to charge around £400 per year (even though there is no activity) and on retaining 2-3 years of cash in the account to cover future charges.  So, just because those shares are currently untradeable, I am required to pay £400 per year, indefinitely.
I have tried everything I can think of.  The only options seem to be very expensive.  For example, formal valuation of the shares by an accountant to form the basis of a connected party transaction to release the shares from the SIPP would cost several thousand pounds.  There is only around £10k in the SIPP.
I have contacted the company.  They have no plans to relist or do anything much, and I think the only reason they haven't liquidated is that the company has tax losses.
Does anyone have any ideas of how to get out of this mess, please?

lozzy1965

What's the company?  There is something called a "negligible value list" for shares that are effectively worth nothing but not delisted yet.  That is usually to use against capital gains (as a loss) though.  Have you asked the SIPP provider what your options are for closing the SIPP (ie. effectively disposing of the shares for nothing)?

Malthusian

Can you do a partial transfer of all the liquid assets to another pension and leave the rest to rot?

BrianHenry

Thanks you lozzy1965.
The SIPP provider in Curtis Banks.  I have asked them for options, and continue to do so.  The options offered so far have been:

• To do a connected party transaction - this requires a valuation.  I obtained the most recent accounts that show negative net assets but they rejected those on the ground that they were too old.  The only other option here is an accountant - I have quotes of £4-5k for that valuation.  Wholly out of proportion (but totally understandable professionally speaking).
• To transfer to a cheaper SIPP plan.  Not a solution but a slight cost reduction.

I don't think the negligible value list is relevant but I'll certainly try it.  Thanks.

BrianHenry

Thank you Malthusian.
Yes but... if I do a partial transfer out I will have to leave nearly £1k in cash to cover 2 years of fees.  Furthermore, I think that after 2 years they would still be able to chase me to pay the fees, even if there's no asset value in the SIPP.

lozzy1965

Wow, I sympathise with your frustration!!!
So for the connected party transaction you can't simply state that as far as you are concerned they are of zero value?  Or that you are happy for them to be regarded as zero value?
If the only rejection was that the asset valuation was too old, might the company provide a newer statement - ideally free, or at least cheaply?
I haven't got time to read all this article, but looks like it may help?
https://www.fool.com/investing/how-to-invest/stocks/delisted-stock/

EDIT:  If you get nowhere their complaints procedure may be a route to go down.

lozzy1965

Just in case BrianHenry pops back on - or anyone else is interested - I stumbled upon this:
https://www.financial-ombudsman.org.uk/files/232422/DRN0395848.pdf
Similar case, though not promising for BrianHenry!  The SIPP provider must ensure that 'fair value' is achieved for the shares, as required by HMRC, to ensure the relevant tax is paid when monies exit the SIPP.  Whilst that link is a complaint about the provider not acting fairly by not allowing the sale of delisted shares via another party, you may get somewhere by complaining about the costs of proving the value of the shares is zero when it seems clear to you that they are, but crux of the issue is that  you will have to show/prove that the shares are of zero value.
It's a real issue!  Complain to your MP?
A note to all SIPP owners of the issues with having AIM shares in your SIPP - but I guess any company could delist itself?

Thrugelmir

lozzy1965 said:

It's a real issue!  Complain to your MP?

Going to need to a lot of MP's if they are to become agony Aunts. 

SeniorSam

Just a thought Brian, have you spoken with any other Sipp provider. The transfer of a SIPP from one platform to another is often done, but you need to understand the detail and the transfer is done by the new platform, not your present provider once you have instructed them, so you don't need to bother with the details.

I have been with Hargreaves Lansdown for many years and have always found them very helpful when discussing matters I have not fully understood.  May I suggest that you speak with them and see if they can shine any light on the problem, which they may well have heard of before.

Alexland

BrianHenry said:

The SIPP provider is insisting on continuing to charge around £400 per year (even though there is no activity) and on retaining 2-3 years of cash in the account to cover future charges.  So, just because those shares are currently untradeable, I am required to pay £400 per year, indefinitely.

Have your tried raising a formal complaint against the SIPP provider? After that have you asked your situation to be escalated to the scheme trustees who have a duty to act in the best interests of scheme beneficiaries?

lozzy1965

Alexland said:

BrianHenry said:

The SIPP provider is insisting on continuing to charge around £400 per year (even though there is no activity) and on retaining 2-3 years of cash in the account to cover future charges.  So, just because those shares are currently untradeable, I am required to pay £400 per year, indefinitely.

Have your tried raising a formal complaint against the SIPP provider? After that have you asked your situation to be escalated to the scheme trustees who have a duty to act in the best interests of scheme beneficiaries?

The trouble is (according to the Ombudsman's ruling I posted above) that the SIPP provider has a duty to HMRC to prove fair value for the shares held when sold.  Tax probably trumps leaving the public stuffed!