Celebrities lose £700m film partnership case
- Author: Zachary Reyes Jun 04, 2017,
Jun 04, 2017, 11:27
David Beckham, Wayne Rooney and other notable celebs have lost a legal bid to overturn a £700m tax bill for film financing.
Many subsequently claimed that they were poorly advised about the schemes and had been unaware of the risks.
In August 2016 the First-tier Tax Tribunal ruled to grant investors a partial relief on claimed investment losses, in two of the three Ingenious Film subsidiaries investigated by HMRC for tax avoidance. Some £420 million of tax was avoided, but with interest included the total owed will be closer to £700 million.
The losses were the accounting losses made by the partnerships, that investors sought to set alongside their other income from the investment.
However, HM Revenue & Customs (HMRC) claimed some schemes were being used to avoid tax rather than fund films.
The tax breaks were possible under rules aimed at boosting the British film industry.
HMRC, which won a similar case against a scheme known as Icebreaker in the recent past, said through a statement: "We are pleased that the tribunal has agreed with us that the vast majority of what was claimed in tax relief by Ingenious investors was simply not due".
Numerous investors, who were promised tax breaks on any losses, said they had been poorly advised and unaware of the risks.
This clarification from the First Tier Tax Tribunal does not change the original ruling, it clarifies how it is to be implemented.
When announcing the appeal a spokesperson for Ingenious said, "All bar one of the 65 films produced by the partnerships now being examined by the Tribunal have achieved a theatrical release". We will be appealing the entire decision of the Tribunal, ' a spokesman from the firm said. Last year, the HMRC won a case against another company called Icebreaker, that was created to bring tax credits to its investors. Ingenious' investors have helped independent films; such as Selma and Mr Turner come to screen and backed profitable blockbusters like Life of Pi and Avatar.