Ant and Dec in tax bill shock
DAVID Beckham and Ant and Dec were yesterday among a host of celebrities who suffered a major blow in a court battle over a £700million tax bill.
The stars were some of the 1,400 wealthy clients who invested in the Ingenious film financing schemes in the hope of securing tax relief.
Ingenious, which helped to produce movies including Avatar, qualified for tax breaks designed to support the UK film industry. But HM Revenue & Customs said Ingenious claimed relief on artificial losses from its films.
That meant the schemes were not legitimate investment opportunities, but a means of avoiding tax.
A tax tribunal this week upheld a 2016 decision to recoup the avoided tax, ruling that the incentives were “not allowable deductions”.
Significant
It means that 1,400 people now face big bills. Stars will also be forced to pay interest, meaning the total amount owed will be about £700million.
There is no suggestion of wrongdoing by celebrities who acted on professional advice.
A spokesman for HMRC said: “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.”
HMRC officials also said scheme users claimed more in tax relief than they had invested. A source added: “This is a massively significant ruling. It has protected around £420million of taxpayers’ money. Add on the interest and the total comes to about £700million.”
A spokesman for Ingenious said that the company would appeal against the ruling, adding: “It is wholly unsatisfactory that the tribunal reached this decision with ‘misgivings and reluctance’.”
The result follows a decision in August 2016 that stated investors should receive tax relief on only 30 per cent, not 100 per cent of their investment. HMRC officials revealed that investors will now receive tax relief on only 4 per cent.
The Ingenious Film Partners 2 LLP scheme qualified for tax breaks under rules designed to stimulate the British film industry.
Clients are advised to invest in lossmaking films and each paid a minimum of £100,000 to invest in the scheme. These losses can be offset against an individual’s liability for tax.
HMRC and Ingenious could not agree the terms of the ruling, with the taxman arguing the film’s production costs were capital costs, meaning investors were not due tax relief on this.
But Ingenious said it “strongly disputed this interpretation, which was at odds with the whole thrust of a very lengthy and closely argued judgment”.