“I’m not a Machiavellian overlord”: Adrian Sacco breaks his silence on the Contractor Loan Recalls

For thousands of contractors caught up in the loan charge saga, one of the most bewildering questions has never been about tax at all.

It is much simpler.

What happened to my loan?

Contractors who remember receiving payments through employment trusts and remuneration arrangements years ago have subsequently received correspondence from companies they had never previously heard of. Loans appear to have passed from original lenders to trustees, then into private companies, and ultimately into the hands of businesses now asserting repayment rights.

The result has been years of confusion about who owns what, why the loans were sold and how a payment received as part of a contractor's remuneration can resurface a decade later as a private debt demand.

Now Adrian Sacco, the former director behind Felicitas Solutions, has given ContractorUK his account of how one significant part of that chain came about.

And perhaps the most striking point is this:

Sacco says he never became involved on the basis that contractors would be pursued for the full value of their loans.

According to Sacco, the proposal put to him in 2019 was effectively the opposite.

“One or two pence in the pound”

Sacco says he was approached in summer 2019 by the late Andrew Campbell, a former accountant who was working within the contractor sector.

Campbell, he says, was assisting with loan books held within trust structures connected to Baker Tilly and its earlier acquisition of Isle of Man trust company ECS.

The idea, according to Sacco, was to consolidate those historic loan books into a single home.

That home would be Felicitas Solutions, an Isle of Man company Sacco says had been established in 2017 and licensed there as a moneylender.

The scale was extraordinary. Sacco recalls being told:

But he says the proposed business model was not to attempt to extract £500m from contractors.

Instead, Campbell's proposal was that the trusts could be closed and contractors approached with what Sacco describes as “very, very friendly repayment terms” — around “one or two pence in the pound.”

Sacco says his understanding was straightforward: contractors would be told that an historic loan remained on the books, but would be offered the opportunity to clear it by paying only a tiny fraction of its nominal value.

In other words, the objective as he understood it was to get rid of the loans, rather than recover them at face value.

That distinction matters because some contractors today are being asked for sums much closer to the nominal amount of historic loans.

Asked directly about full-value recovery, Sacco's view was unequivocal. He said pursuing somebody for the entirety of such a loan would be “****** unfair”, adding that he thought it would be wrong and that requiring repayment of the whole amount would be “absurd”.

Not one loan book — and not one route

Sacco's account also helps explain another source of contractor confusion.

There was never necessarily one single loan book.

He describes “a number of different loan books”, “a number of different schemes” and “a number of different routes”.

In some cases, he says, Baker Tilly trust companies had themselves been the original lender.

In others, loans may originally have been made by employment or self-employment intermediaries before subsequently being transferred into entities held by Baker Tilly as trustee.

From memory, Sacco identifies ECS International as one trustee that hosted a significant proportion of the loans — although he stresses that it was not the only one.

That distinction could be critical for contractors attempting to reconstruct their own position.

Two people who appear to have used similar contractor arrangements may not necessarily have the same original lender, the same contractual documentation or even the same chain of subsequent assignments.

Sacco's practical suggestion is simple: go back to the original loan documentation.

That, he says, should identify who originally made the loan.

Who funded the purchase?

There is another layer to the story.

Sacco says Felicitas itself was not simply financing the acquisition and administration of hundreds of millions of pounds of nominal debt.

There was a funder.

He says he remains bound by confidentiality and cannot identify the party he describes at different points as the funder or “principal”.

But according to Sacco, that party was to provide both the money required to acquire the loan books and the resources required to administer them.

Sacco's own operation was relatively small — he describes an office of around seven people in Malta and one person in the Isle of Man — and says the administration therefore had to be outsourced and financed by the funder.

He also says the consideration being discussed for the loan books was considerably below their face value.

His account of the reasoning will be familiar to anyone who has followed the debt-purchasing industry: the loans were unsecured, historic borrower records could be incomplete or outdated, and second-hand debt often changes hands for substantially less than the amount notionally outstanding.

What remains unknown is precisely how much was paid.

Then the model changed

According to Sacco, a significant change followed Campbell's death around the end of 2019 or beginning of 2020.

He says the funder appointed a project manager. And, in Sacco's words: “Things took a slightly different turn.”

He now says he regrets not walking away at that point.

“I was months into working on this project. And I like to see things through, and in this instance I'm sorry I did.”

Most significantly, Sacco says the commercial arrangement changed.

What he describes as a proposed structure based on ordinary maintenance and time-spent fees became instead a share of loan recoveries.

The unnamed principal, he says, took “the lion's share”, while Felicitas received a smaller proportion.

“I didn't particularly want that. But that's… I agreed to it, and I hold my hand up to that, and I shouldn't have.”

That raises an important distinction for anyone trying to understand who ultimately benefited economically from the recalls.

The company legally holding or administering a loan does not necessarily tell us who stood to receive most of the proceeds.

The letters arrive

Sacco says a firm of solicitors was then appointed by the project manager to deal with the contractors.

Notices of assignment began going out in early 2020, informing borrowers that rights relating to the loans had changed hands.

The response was immediate.

Contractor forums filled with questions. Borrowers who had never dealt with Felicitas began investigating the company and those behind it.

Sacco himself became the focus of considerable anger.

But in hindsight, he says he understood why contractors were upset.

Asked whether he had considered what borrowers were experiencing, Sacco replied: “Yes, I did. I did, and I do.”

He says the manner in which contractors were approached “is not the way in which I would have gone about it”, arguing that a more conciliatory and empathetic approach would have been preferable — one aimed at closing the loans while causing the least possible “pain and hassle”.

“That would have been a preferable approach. But that's not what happened.”

Were some contractors mis-sold these schemes?

Sacco is careful not to characterise every contractor caught up in disguised remuneration arrangements as a victim.

He draws a distinction between people who deliberately moved between tax-avoidance arrangements over many years and those who, in his view, were sold products they did not properly understand.

The arrangements he originally envisaged, he says, were aimed at relatively sophisticated, higher-earning professionals.

But as the products moved into wider sales and distribution networks, Sacco says the target market began travelling down the income scale.

“If we lower the bar to, you know, people earning 70 grand or 60 grand.”

“Instead of doctors, let's make it nurses; instead of… senior developers, let's make it… rank and file programmers.”

Sacco says he objected.

“I pushed against it and made myself unpopular with people I was working with.”

“I thought that, frankly, that's a mis-sale.”

And Sacco says that view wasn't merely theoretical.

He recalls being contacted while he was a director of the company holding the loans by a woman working in healthcare administration.

She had criticised him publicly, but when Sacco spoke to her and heard how she had entered the arrangement, he says he reached a different conclusion.

She had been earning around £40,000 a year.

Sacco believed she had been mis-sold the scheme.

What happened next provides a rare glimpse into how individual cases could apparently be treated while the loan books were under Felicitas.

“I was the director of the lending company.”

“I've just spoken with this lady. I believe it's a case of mis-selling… I think that what we should do is write off her debt.”

The project manager agreed.

“We wrote to her to tell her that her loan was cancelled.”

That raises an obvious question.

If Sacco had the ability to “push the button” on one loan, could he have pushed it on all of them?

Asked whether there had ever been a point at which he could simply have made the problem disappear, Sacco pauses. “It's a very good question.”

His answer is no — or at least, not without consequences.

“If I'd started writing to debtors wholesale, I think that what would have happened is that the funder would have pulled the plug on me. That wasn't a discussion that was ever going to happen.”

But his own test for individual cases appears to have been considerably more nuanced.

For contractors now receiving demands for repayment, that history could be significant — although it does not, by itself, establish a legal defense to a current claim.

It also raises a question that may matter increasingly as contractors seek individual resolutions: what were they told when they entered the scheme?

Sacco says he did not personally investigate the circumstances in which each of the hundreds of loans Felicitas acquired had originally been sold. “These were hundreds of loans… I didn't look.”

For affected contractors, contemporaneous evidence may therefore matter: emails from recruiters and scheme providers, marketing materials, contracts, payslips, explanations of how the arrangement worked, representations about whether the “loan” would ever be repaid, and evidence showing how and why the contractor entered the scheme.

Sacco's position today is not that all such loans should automatically be cancelled.

But he does say that where evidence of a sham emerges, he would hope the current holder would remove the loan from its books rather than “prolong agony for an individual”. He also says he would expect genuine health or financial hardship to be treated sympathetically, and loans which are unenforceable or likely to be unenforceable to be treated accordingly.

The loans move again

Sacco says his involvement ultimately lasted less than two years.

He describes reaching the point where “enough is enough” and giving notice that his company no longer wished to be involved.

It then took several months, he says, for the principal to find “a new home for the loans”.

He describes their eventual departure from his business as “a massive relief”.

Two businesses had expressed interest in acquiring the portfolio, he says.

The eventual purchaser was West 28th Street Limited.

Sacco says West 28th dealt principally with the unnamed principal rather than with him directly. He says the project manager connected to the principal held the borrower information used by West 28th during its due diligence.

Since the transfer, Sacco says he has had only minimal contact with West 28th, principally when historic information was missing from borrower records.

He says he does not know the basis on which West 28th is now pursuing individual contractors, nor how aggressively it is doing so.

What does this mean for contractors?

For contractors receiving recall correspondence today, the useful questions may therefore be increasingly specific:

• Who was the original lender?
• Was the loan made through an employment relationship, a trust or another intermediary?
• Who subsequently acquired it?
• When did each assignment occur?
• What was the contractor told at the time about whether the loan would ever need to be repaid?
• And which company is now asserting the right to collect it?

For years, contractors have largely been looking at the last letter in the chain.

Sacco's account suggests that understanding what that letter means may require going all the way back to the first.

Prior to publication, ContractorUK contacted Baker Tilly IOM for a right to reply. Any comment received will be published.