TONY HETHERINGTON: No pictures tell a thousand words

Tony Hetherington is Financial Mail on Sunday’s chief investigator. He battles the reader’s corner, reveals the truth that lies behind closed doors, and wins victories for those left out of pocket. Below you can read how to contact him.

KP writes: Have you come across Smith & Partner Limited known as S&P Gallery?

It cold rang my elderly and semi-literate stepfather and convinced him to buy £17,000 worth of art held in storage that he has no access to.

Tony Hetherington replies: Smith & Partner and its online art business raise far more questions than answers. It sells limited edition prints as an investment, but refuses to explain how some of its claims might be true. Your stepfather says that after his initial investment, the company told him that his original purchases had increased in value by £3,000 within weeks.

He was persuaded to bet more money, almost £7,000. I asked Smith & Partner to say which prints had made a profit of £3,000 in such a short time, but it offered no answer.

You’d think your stepdad could take his prints to a qualified art expert and have them appraised, but this isn’t as easy as it seems. S&P advertises that customers can “own and display a rare commodity.” And the terms and conditions state that the price includes delivery. But when your stepfather brought this up, he said S&P replied that his prints should be kept.

Your stepfather dealt with two different salespeople at S&P and insists that both assured him that the company could resell prints in about five days. But when he asked to sell, nothing happened. And that was four months ago, not five days.

So why should anyone invest in the first place? Well, according to S&P, investors can earn “potential returns of up to 64.6 percent” in just 12 months. This is a very accurate figure, but where does it come from and what prints of S&P have produced such huge gains in such a short period of time? I asked, but S&P won’t say.

The answer could be that these and other claims are simply false. Outrageously, S&P is actually telling clients not to trust their own claims. Buried in the terms and conditions is a warning that ‘advertisements produced by us are not part of the contract and have no contractual force’.

In short, S&P believes it can make false claims while telling investors not to believe them. I would like to see this tested in court.

And this is not the only pitfall in terms of the company. They reveal that prints are stored in Zurich, Switzerland, with costs after the first year starting at £150 a year and rising to £2,500. S&P also claims the right to increase fees in line with inflation. If a customer does not pay up front, the company claims the right to confiscate the prints and resell them, at any price, without any liability.

In fact, S&P itself is on shaky ground, by its own accounts. The latest records show that the taxpayer issued a £338,780 demand that S&P contested. But it concedes that if the taxman wins, the company’s total bill could be £2.5 million. Would S&P survive this? And how would customers get their prints if the company went bankrupt? I’ve asked both questions, but S&P hasn’t answered either.

Smith & Partner Limited is owned and run by Luke Sparkes, 31, and at the company’s last accounting date, he personally owed the company £459,038. Did he pay this back? I asked, but he wouldn’t answer.

And this isn’t Sparkes’ first time in this business. He previously ran a company called Sovereign Antique Collections Limited in which he described himself as dealing in fine art and antiques. Shortly after he stepped down as director, it went bankrupt.

Investing in printing is not regulated by the Financial Conduct Authority or any other watchdog. So what about S&P’s claim that “benefits of using our art investment service are: Regulated by the Fine Art Guild so guaranteed provenance”?

This is a real, legitimate organization with the full title Fine Art Trade Guild. But it is not a regulator and S&P is not even a member. Chairman Mark Wallington told me, “The Guild received a number of complaints about Smith & Partner. After we intervened on behalf of consumers and pointed out to their directors the obligation to adhere to the Guild’s Code of Ethics, we concluded that they had little interest in doing so.’

S&P was kicked out of the Guild last June. Her continued claim to membership is a lie.

VAT chaos means I can’t feed my family!

SD writes: I write desperately. I have a small business in Shropshire and have had to register for VAT to sell on eBay. I applied to HM Revenue & Customs and got a VAT number but eBay told me it was not valid.

I’ve lost count of how many times I’ve contacted the IRS helpline. Everyone blames someone else. I’ve used up almost all of my savings.

I am about to be evicted from my property. I can’t feed my family. And no one seems to care.

Hit in the pocket: SD applied to HM Revenue & Customs and got a VAT number

Tony Hetherington replies: The Tax and Customs Administration has a website where anyone can check whether VAT is being charged by someone using a false VAT number. When I entered your number it immediately came up as invalid. I contacted the IRS and they confirmed that your number was correct.

Employees then called you and explained how you can print your VAT certificate. But when I checked online – as eBay would – the number still flashed as invalid. You may not be the only one suffering, as the next call you received from the VAT office was to tell you that a ‘repair’ was due.

I went back to the IRS and this time it worked. One of them apologized and explained, “We have now resolved the issue that was due to an administrative error.” You told me, “I’ve been over the moon all day — it’s such a relief to have this lifted off my shoulders.”

If you believe you have been the victim of financial misconduct, write to Tony Hetherington at Financial Mail, 2 Derry Street, London W8 5TS or email tony.hetherington@mailonsunday.co.uk. Due to the large number of questions, no personal answers can be given. Only send copies of original documents, which unfortunately cannot be returned.