Tax relief question mark over scheme

The tax relief eligibility of a proposed pounds 95m enterprise zone property unit trust is to be discussed in a High Court hearing on Tuesday.

The Docklands scheme - Matrix South Quay sponsored by Matrix-Securities - will become the largest enterprise zone project if it goes through, as planned, at the start of next month. However, the attractions of the scheme, which offers a 20.6 per cent return on investment within six months, hinge initially on its eligibility for tax relief.

Matrix-Securities was given clearance for the scheme's tax reliefs several weeks ago by the local tax inspector dealing with it. However, last week it received a fax from the Inland Revenue head office. In a letter subsequently sent out to potential investors, Matrix said: 'This fax states that, on the facts provided to the Revenue, the accuracy of which is not in question, the clearance previously and unequivocally given to us should not have been given and that the Board of the Inland Revenue 'cannot undertake not to challenge certain aspects of the scheme'.'

Matrix says it is confident it will win the day on Tuesday. In their letter to investors, the Matrix directors go on to say: 'We have been advised by leading tax counsel that the points raised by the Revenue in their fax are wrong and moreover, the facts concerning these points were put to and previously agreed by the Revenue in their clearance application. Counsel has further advised that in any event the Revenue is not entitled to withdraw its clearance as that would be unfair and an abuse of power.'

Matrix says that investors' cheques will not be presented to the bank 'until this problem with the Revenue has been resolved'.

Commentaries on the scheme are available from specialist advisers Allenbridge Group (071- 409 1111) and BESt Investment (071-936 2037).