James Capel in US tax dispute

JAMES Capel, the stockbroker owned by Hongkong & Shanghai Bank, is in dispute with the US Internal Revenue Service over the tax liabilities of two former employees, writes John Willcock.

The row concerns two senior directors, Peter Green, head of international operations, and John Webster, New York chief. Both left James Capel with undisclosed pay-offs in April, after an investigation into the collapse of an Eastern European venture capital company with losses of pounds 16m.

The dispute revolves around who is liable for the executives' tax payments over the past few years. Senior expatriate employees working for James Capel in the US were paid bonuses offshore but undertook to make their own tax arrangements. There is now a suggestion that, under US law, the company is liable for their tax payments.

James Capel refused to be drawn on the dispute last night. A spokeswoman said: 'The group has been reviewing its tax affairs, which are cross- border and very complex. We are looking to clarify the situation.'

She refused to comment on how much was at stake, why Mr Green and Mr Webster left the company, or whether other parts of James Capel were affected.

Sources in the City were speculating that the sums involved could be as much as pounds 10m, but it is understood that this is on the high side.

Mr Green and Mr Webster left along with James Fergusson, managing director in London. James Capel's New York office advised on the 1990 share placing of New Europe Hotels, which aimed to cater for business travellers in former Iron Curtain countries.