Store First offered investors the opportunity to invest in storage pods with the promise of an 8% “guaranteed” return in the early years.
The returns have long since dried up; an investor has told us that they received the promised “guaranteed” returns for 12 months but these payments then stopped. We are not aware of any owner of a Store First pod successfully selling their investment either back to Store First or a third party. With no yield and no secondary market, this means Store First pods are effectively worthless.
On top of this, Store First has recently written to investors to tell them that they are liable to pay business rates to Barnsley Council (and not, as the Valuation Office had previously argued, Store First itself).
Business rates are calculated based on the “rateable value” of a property – in this case the storage pod.
Store First’s letter says “Store First has been in negotiations with the Valuation Office to agree the best possible price for rates applied to individual storage units within the centre and we can confirm we have secured a low rate on behalf of investors”.
By “best possible price” Store First means the lowest possible price as the lower the value of a property, the less tax the business owner is liable for. So essentially Store First have been spending their time trying to persuade the Valuation Office that Store First pods are worth as little as possible.
Sadly for investors, the Valuation Office has apparently not taken the view that the storage pods are worthless, as otherwise no business rates would be charged.
In 2017 the Secretary of State for Business lodged a petition in the High Court to wind up Store First and various associated companies. The petitions were adjourned in July 2017. At time of writing, a court date has still not been set.
Also in July 2017, Store First Limited extended its accounting period by six months, giving it another six months to publish its 2017 accounts. The accounts are now due to be filed with Companies House within the next month, by the end of March 2018. (Store First cannot extend the accounting period again as the period for the 2017 accounts is already the maximum eighteen months, plus you can only do this once every five years.)
By being asked to pay business rates for worthless investments, investors are effectively being forced by the Government to throw good money after bad. Among the owners of Store First pods are victims of the Henley Retirement Benefit Scheme and Capita Oak Pension Scheme, which means that yet again the taxman has gone after the holders of unsuitable investments rather than the people who have their money – reminiscent of HMRC’s bills for unauthorised payment charges sent to the victims of pension liberation fraud.
Unfortunately for investors, the rateable value determined by the Valuation Office is somewhat theoretical and based on the rent that the property could have been let for in 2015, based on its size, location and the nature of the property. The VO may have taken the view that it is not their problem that Store First investors are unable to realise any rent from their property.
Nonetheless, it would seem well-advised for individual Store First investors to contact Barnsley Council and the Valuations Office as a matter of urgency and appeal the rateable value of their investment that Store First has “negotiated” on their behalf, on the basis that the market value of the property is considerably less (nothing). We are not able to say whether this has any chance of success, but it is surely worth trying. Details of how to challenge a rateable value can be found on gov.uk.
There is another obvious way out of this mess. Investors in Store First were told they had a “buy back option” after five years, but we are unaware of any investor in Store First successfully exercising this buy back option and receiving cash for their investment. A Store First investor has told us that when they applied to exercise the buy back option, they were told it is optional, and that Store First has another five years in which to decide whether to buy the investment back.
The solution is for Store First to offer to buy the investors’ pods back immediately at the rateable value they “negotiated” with the Valuations Office. If Store First has negotiated this value with the Valuations Office, they must surely believe it represents fair value.
While this would likely result in investors writing off a significant loss, it would free them from having to pay further money to Barnsley Council on top of what they paid for the storage pod. Store First, in exchange, would get their storage pod at a value they believe is fair, along with the yield from future storage customers.
It may be that this option isn’t practical, but we can’t at the moment think of a reason why not.