Diligent by name and diligent by nature — and a paid-up PropertyWikia Affiliate — I thought I'd see what light I can shed on one or two of the contentious issues surrounding the business...
THE COMPANY REGISTRATION ISSUE
Let's first of all be sure of what PropertyWikia claims about its legal structure on the 'About Us' page:
"PropertyWikia is the public trading arm of the RMV Group which is a private investment platform and both are 'trading names' of and fully owned by 3iCatalyst.com who are based in London. 3iCatalyst is a partnership and PropertyWikia is a trading name/brand name.
RMV Group is a group of over five thousand strong investors that provide PropertyWikia with its unlimited investor buying power.
3iCatalyst.com is a NO VC (No Venture Capital) incubator that funds, launches and helps run successful companies worldwide. The business handles investments of over £12.5 Billion.
Founded by some of the best business minds in today’s business world, 3iCatalyst strives to develop businesses that have significant potential for high growth and rapid return for investors. PropertyWikia is one such business.
Some of the clients 3iCatalyst participate with, fund or advise include Play.com, BlackBerry, Virgin, flickr, Yahoo, Rio Tinto, easyJet and BP - to name but a few.
Both PropertyWikia and the RMV Group are office based at Canary Wharf in London's Docklands."
Going by that statement, then, we must take it that the business names 'PropertyWikia' and 'RMV Group' are simply trading/brand names belonging to 3iCatalyst. Not companies. Not even registered trademarks. So on that basis, under UK law, the two names do NOT have to be registered with any Government body or other organisation.
Meanwhile 3iCatalyst, we’re led to believe, is a 'partnership'. Well in fact, there are 3 types of partnership in terms of legal structure: general partnership, limited partnership, and limited liability partnership (LLP). And of those, only the ‘limited’ ones are required by law to be registered. In the absence of clarification from 3iCatalyst, it's reasonable to take their partnership to be a general partnership. ( Source:
Business support, information and advice | Business Link ).
It's no surprise at all, then, that in searches of business name databases, nothing comes up for either 'PropertyWikia', or 'Property Wikia', or 'RMV Group', or '3iCatalyst'. See for yourself over at Dun & Bradstreet (
D&B ) and Companies House (
WebCHeck - Select and Access Company Information ).
Also check out the National Business Register, where you can run a meta-search of several databases. The only one that turns up results — but results irrelevant to the issue — is their domain name database. ( See
http://www.start.biz/home.htm ).
However, there is something else that's highly relevant to the registered name issue. Under
'The Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2009', the word 'Group' is classed as a 'sensitive' word. A business using a name containing such a word is required to obtain prior consent to do so from a specified Government or public body. Without this, they are acting unlawfully ( source:
Guidance - incorporation and names (GP1) ).
There would have to be an official record of any such consent, so in the absence of any other verifiable proof of their legitimacy, a perfectly reasonable due diligence question to put to PropertyWikia is...
"Have you obtained prior consent from a Government or other body to use the name 'RMV Group', and if so, would you please disclose documentary proof?"
But of course there's one Government body with which every single business of whatever legal structure must register, and that's Her Majesty's Revenue & Customs (HMRC). Which leads us neatly to the next bone of contention...
THE VAT ISSUE
A UK business that's 'distance selling' on the web such as PropertyWikia must apply for VAT registration once its VAT-taxable turnover derived from UK-based sources during the previous 12 months reaches the threshold of £70,000. ( Source:
HM Revenue & Customs: When to register for UK VAT )
In early September 2011, a number of affiliates started to query PropertyWikia's position on VAT — their failure to disclose a VAT number; the absence of any mention of VAT on the £109 area fees; receipts/invoices showing no VAT component and no VAT number. PropertyWikia's response to these concerns was to issue this statement on 12th September:
“Why doesn't PropertyWikia charge VAT on areas?
The coding cost/s for your area/s is/are classed as a reservation. VAT should not be levied against refundable reservation.
Each area you order will transform into a *'Franchised Area' in October 2012 subject to your acceptance of its area franchise agreement.
Your franchise agreement will be available in September 2012 in you language.
Until acceptance or rejection of the franchise agreement you can generate and get paid commission and commission overrides and still get paid between now and October 2012 on you ordered areas as advertised.
Your coding cost/s reserves your *franchised areas in your name until you accept the final franchise contract. Upon acceptance of the final contract your account will be billed any VAT owing under the transaction prevalent rate (currently 20%). This payment will be deducted from earnings.
In 2012 all affiliates will get transformed into a franchise offering a local property website/portal dedicated to their HQ to attract more owners without having to invite any longer - supported by PropertyWikia.
Affiliates will be provided with a local property portal/website and the required tools to operate as part of this franchise at no extra cost. Franchise can be cancelled at any time before signature.
* More details to be released.”
( Source:
PropertyWikia - Affiliates FAQs - Why doesn't PropertyWikia charge VAT on areas? )
We got an explanation, then, of PropertyWikia's treatment of VAT on fees, but they completely ducked the legitimate questions about their current VAT status. So, to get to the bottom of all this, I gave HMRC’s VAT Helpline a ring (0845 010 9000) and asked an advisor if there's a VAT number for '3iCatalyst trading as PropertyWikia (part of the RMV Group)'.
As I half expected, they said that if I can give them a VAT number they can tell me the name of the business it belongs to but they can’t do the opposite; it goes against their rules of confidentiality. Disappointing but fair enough.
Then I thought: while I’ve got a very helpful HMRC advisor on the phone I'll pump them for their take on the company's treatment of VAT on area fees. So I got them to read the Affiliate Q&As web page where the statement was posted. Here's a summary of what the advisor had to say:
The ‘VAT tax point’ — the point at which VAT must be levied on a supply — is the point at which the vendor receives payment for that supply. PropertyWikia may define an area fee as a 'refundable reservation' on a 'franchised area' but it CANNOT defer until acceptance of the franchise agreement settlement of any VAT element of a pre-paid fee. (See:
Actual tax points: payments: refundable deposits )
So there we have it... from the horse's mouth. In light of this, how should we interpret PropertyWikia's statement?
Well I interpret it to mean that if the company hasn't been charging affiliates VAT to date, they must NOT be VAT registered. And that's because over the last 12 months, turnover from all UK sources — not just from area fees — can't have totalled £70,000. However they anticipate they will have reached that threshold and be VAT registered by October 2012 when franchise agreements are signed.
But unfortunately, they haven’t applied the VAT tax point rules correctly; they've failed to understand that they can't defer VAT as proposed. Evidently not even one of "the best business minds in today’s business world" could get their grey matter round basic VAT law.
But I can guess what you're thinking by now...
"That's all very interesting, but there's a bloody great elephant in the room waving a big red flag in its trunk! Given PropertyWikia's claims about their sources of revenue, surely they would have needed to register for VAT months ago?"
Okay, let's go check out the current figures for those sources on the 'About Us' page, under 'How We Make Money':
PropertyWikia - About PropertyWikia.com ...
Well, we don't have to look any further, do we, than 'Ad Revenue' at the top of the list for an answer to the question...
Our Ad Revenue 2011
£24,254,030.00 GBP
"This figure indicates the pre-paid advertising order
book’s balance for 2011 (fluctuates daily)."
Notice the word 'pre-paid'. That doesn't mean pledged payment. That doesn't mean pending payment. Pre-paid means digits on the sales ledger. Cash in the bank. Only £70,000 of that figure (about 0.29%) would need to be sourced in the UK for the VAT-registration threshold to have been reached.
And that's just revenue claimed for PropertyWikia. Don't forget, they say PropertyWikia is just a trade/brand name, so the business entity affiliates and third parties actually transact with must be the 3iCatalyst 'partnership'. Were we affiliates being charged VAT it would be collected by HMRC on 3iCatalyst's VAT returns.
Therefore the turnover qualifying 3iCatalyst for VAT registration must include revenue derived from handling the claimed "investments of over £12.5 Billion", plus revenue derived from any other business done with the companies whose logos appear all over their home page, plus the claimed multi-million-pound PropertyWikia revenue. (Ref:
3icatalyst )
[I've just noticed that within the last day or so they've removed all those logos and added their Canary Wharf address. But not to worry, the home page is archived as far back as January 2008, here:
Internet Archive Wayback Machine .]
So... these perfectly reasonable due diligence questions still remain for the company to answer unequivocally:
"Is 3iCatalyst t/a PropertyWikia (part of the RMV Group) registered for VAT or is it not?"
"If it is registered, what's your VAT number and why have you not charged VAT on area license fees to date?"
"If it's not registered, given your claimed turnover, which far exceeds the VAT-registration threshold, why not?"
And now, in addition...
"Regarding your September 12th statement, why have you improperly applied VAT tax point law in your treatment of VAT on area fees?"
Whilst on the subject of improperly applied law, let's deal with a very important issue I don't think has been aired...
THE TRADING SCHEMES LAW ISSUE
PropertyWikia is offering a network/multi-level marketing business opportunity, which the UK Government defines as a 'trading scheme'. As such, it falls under
The Trading Schemes Regulations 1997.
Under the terms of those regulations...
"A promoter of, or a participant in, a trading scheme shall not accept from a participant joining the trading scheme any payment or an undertaking to make a payment of any sum exceeding £200 unless 7 days have expired from the making of the agreement relating to goods or services supplied or to be supplied under that agreement to the participant by the promoter or any other participant under the trading scheme."
In layman's language... an MLM company cannot charge an enrolee more than £200 within the first 7 days of their joining the business.
Yet, following their 24-hour trial period, an enrolling PropertyWikia affiliate is encouraged to fork out well in excess of that legal limit. They're offered a single area license costing £109 and the option to buy up to 11 more, discounted on a sliding scale when ordered at the same time. This is the price list:
1 — £109.00
2 — £196.20
3 — £287.76
4 — £374.96
5 — £452.35
6 — £523.20
7 — £587.51
8 — £654.00
9 — £706.32
10 — £719.40
11 — £743.38
12 — £719.40
So the next query PropertyWikia need to deal with — before Trading Standards or City of London Police deal with
them — is...
"Why are you taking payments from new affiliates for more than 2 areas, in violation of Trading Schemes law?"
So, ladies and gentlemen of the jury... 3iCatalyst trading as PropertyWikia (part of the RMV Group). Scam or no scam? Conspiracy to defraud or conspiracy to revolutionise the property market?
You may like to retire, do your own due diligence, and consider your verdict.
You can probably guess what my verdict is.
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