Purplebricks reveals it is in discussion with HMRC over anti-money laundering

Purplebricks has warned shareholders that it is in discussion with HMRC over its anti-money laundering procedures, and that there could be a potential cost.

A statement on page 79 of Purplebricks’ latest annual report discloses a “contingent liability”.

It says that during an AML compliance check, “a number of findings were noted in relation to non compliance with certain aspects of this legislation”.

The statement continues: “At the balance sheet date and the date of this annual report the company is unable to reliably estimate the financial impact of these findings and related ongoing discussions.”

The statement says that Purplebricks is not involved in any legal, arbitration or governmental discussions, including the one cited with HMRC, which could have had a material effect on the business’s financial position.

Purplebricks yesterday declined to comment as did HMRC, citing taxpayer confidentiality.

In the annual report, Purplebricks also warns of a possible risk of litigation, but this is in the context of the number of changes it has recently undergone in terms of leadership, structure and geographic footprint.

In March this year it was announced that Countrywide were fined £215,000 by HMRC for failing to ensure that its AML procedures and record-keeping were in line with regulations.

Countrywide said it has improved its anti-money laundering controls.

Also fined was online agency Tepilo, which received a £68,595 penalty, and Settled which was fined £3,245.

HMRC also made 50 surprise visits to estate agents in one week as part of a crackdown.

HMRC said it would now take action against businesses that failed to comply, although it did not name any of them.

Of the agents visited, 35 were in London, five in Leicester, four in Buckinghamshire and Berkshire combined, three in Greater Manchester and one each in Watford, Wakefield and Wolverhampton.

Last week, HMRC fined currency company Touma Foreign Exchange a record £7.8m, not because of any actual money-laundering but breaches including risk assessments, record keeping, due diligence and staff training.

Separately, writing on Forbes, property portals analyst Mike DelPrete has said that Purplebricks’ “impressive growth in the UK market continues” but points to a drop in revenue in the softer market:

https://www.forbes.com/sites/mikedelprete/2019/09/11/after-us-flop-real-estate-brokerage-purplebricks-faces-mounting-headwinds-in-the-uk/#5b847e104fc1

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22 Comments

  1. TwitterSalisPropNews

    It is crucial every estate agent complies with AML checks right on day one, otherwise it lets down every party later in the chain of home moving if initial ID checks have not been complied with. ID fraud will onby snowballwhich will end up as a real nightmare.

    There must be no weak links permitted!

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    1. Bless You

      I’m still waiting for the real legal challenges. Brucies didn’t bail for nothing.

      They knew something was going to hit the fan.

       

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      1. Moveaside01

        AML, what does that stand for then?

        Oh yeah, I know, I think it relates to their investors, ‘All Money Lost’……..

        :

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        1. AgencyInsider

          LOL !

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      2. Chris Wood

        There is correspondence prior to their departure which shows they were made aware of this (though, of course, as a solicitor and the CEO of a PLC, Mr Bruce would/ should have been well aware of such responsibilities in any case).

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  2. JustPlainSavage04

    Surely their game changing, disrupting, customer focused technology can do AML check properly? Oh wait…

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  3. JustPlainSavage04

    Customer to LPE: Here’s my ID for my AML check

    LPE: Hold my beer….

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  4. Ostrich17

    This must be related to the PIE story in August 2018 when Kenny Bruce fired off emails threatening to withhold LPE’s commission:

     

    https://propertyindustryeye.com/purplebricks-to-withhold-commission-from-local-property-experts-after-over-450-breaches/

     

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  5. AgencyInsider

    Hang on. I thought all LPEs are self employed. Aren’t they individually responsible for AML?

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    1. Ohmygod

      You could argue that as it’s the vendor who sets the property live it is their responsibility! I’m sure that will be the next thing.

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      1. Mark Walker 2

        I think that you missed the ”
        Developers selling homes do not have to register for AML but estate agents do – taxman clarifies”
        story on major developers, as “They are regarded as peer to peer, or private, sellers.”

        https://propertyindustryeye.com/developers-selling-homes-do-not-have-to-register-for-aml-but-estate-agents-do-taxman-clarifies/

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  6. Chris Wood

    A reminder that purplebricks have form on this as pointed out by Ostritch17. A further reminder that AML falls under criminal and civil law. Also, as pointed out above and previously many times on here, LPEs are, according to PURP, self employed “independent” estate agents so should be investigated individually. A further reminder that NAEA, ARLA, TPO, NTSEAT/ NTSELAT have all refused to act against a firm/s that openly stated they had breached AML regulations and were serially falling foul of ASA rules. Questions must again now be asked why these organisations who are paid vast sums of money to uphold the law/ oversee good practice/ professionalism on behalf of the government, consumers and agents appear to turn a blind eye to this PLC.

    I can also now confirm I was approached by HMRC earlier this year seeking specialist estate agency related advice on AML, VAT, NI, working time directive, minimum wage/ slave labour, sick/holiday/ maternity pay and a number of other issues relating to hybrid estate agency models as they were, at the time, considering whether to set up a formal investigation. I can further confirm I was asked if I would be prepared to act as a witness for and supply correspondence to HMRC in any cases that might be brought as a result of any such investigation. I gave my consent to HMRC if such an event we’re to arise.

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    1. Ohmygod

      Chris, I am currently a territory owner at PB and I am being investigated by HMRC under IR35, this has been going on for over a year now. I understand there are 6 of us being investigated.

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      1. PeeBee

        Ohmygod 
         
        I am sorry to hear of your ongoing situation.
         
        Simple question.
         
        Have you followed Purplebricks’ documented requirements for AML to the letter?

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        1. Woodentop

          Did PB have the necessary checks in place and more importantly doing them?

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      2. Woodentop

        HMRC will allow reductions to the penalty when you make an unprompted disclosure that you’ve breached the regulations. An unprompted disclosure is when you contact HMRC before it contacts you for any type of enquiry or intervention. Bit late for you but other LPE’s would be best to consider … the hangman is coming.

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      3. iansimons

        The off-payroll working rules
        The off-payroll working rules can apply if a worker provides their services through an intermediary.
        An intermediary will usually be the worker’s own personal service company. They could also be a partnership, a managed service company, or an individual.
        The rules make sure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same tax and National Insurance contributions as employees.
        These rules are sometimes known as ‘IR35’.
        You may be affected by these rules if you are:

        a worker who provides their services through their intermediary
        a client who receives services from a worker through their intermediary
        an agency providing workers’ services through their intermediary

        If the rules apply, tax and National Insurance contributions must be deducted from fees and paid to HMRC.

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        1. Chris Wood

          Also worth reading for ALL employers, gig economy ‘workers’ and franchisees/ ors – due to URL restrictions on posting go to Google and use the following searches:
          “Acas publishes new guidance to help understand gig economy working and”
          “ACAS checking-your-employment-rights”
          “Employee or worker? According to the Employment Rights Act 1996, employees can generally be classed as one of the following: Limb (a) worker – An individual who works under a contract of employment Limb (b) worker – An individual who by any other contract, verbal or written, personally undertakes work for someone else” +FOYS Solicitors
          “The National Minimum Wage and Living Wage Contents Overview Who gets the minimum wage Employers and the minimum wage Worker disputes over minimum wage” +”gov.uk/national-minimum-wage”
          “Securing services etc by force, threats or deception (5)The person is subjected to force, threats or deception designed to induce him or her— (a)to provide services of any kind, (b)to provide another person with benefits of any kind, or (c)to enable another person to acquire benefits of any kind.” +”legislation.gov.uk/ukpga/2015/30/section/3/enacted” (note the use of the word ‘deceived’ in the legislation)

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      4. s71

        For  Ohmygod,

        Just a thought, you are being investigated as a LPE, but you need to advise HMRC that you never received any funds from clients into your account, all the fees were paid to PB!!!

        If PB is willing to accept money without due diligence then it should not be your fault. You may be independent but money was never paid to you. Why did PB not object at time of receiving the money that the AML check are not proper!!!

         

        good luck

         

         

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  7. watchdog13

    Pleased to see that NAEA have launched an AML compliance health check service to help agents ensure they are compliant. Details are on their website.

    The whole AML compliance issue is complex and unfair that agents are being asked to police the sector. HMRC keep imposing new costs and responsibilities without giving adequate support.

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    1. Chris Wood

      NAEA (along with NTSEAT and TPO) were made aware that PURP had publicly admitted multiple breaches of AML legislation (see above) but have failed to act on this or other serious allegatipons/ evidence. The NAEA has a great many questions to answer including why it took payment from PURP for Mark Haywood to speak at and publicly praise PURP for its transparency a couple of years ago at its (PURPS) National conference.

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  8. Woodentop

    Several years ago I pointed out that on-line only was a “classic vehicle for money laundering” and next to impossible to get right. As PB wish to be known as the UK’s biggest agent, will they receive the biggest fine? I don’t think we have heard the last of PB downfalls. They can’t argue they did not know their responsibilities.

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