Star-studded film scheme beats taxman
In latest twist of £700m legal saga...
DAVID Beckham, Gary Lineker and Jeremy Paxman are among a string of celebrities who have won against the taxman in a multi-million-pound legal battle.
A controversial film scheme they invested in has won an appeal against HMRC over bills estimated to be worth around £64million in total.
The ruling applies to 4 per cent of £700million the taxman claimed from investors in Ingenious Media.
It is unclear what the latest outcome of the seven-year battle means for taxpayers as lawyers on both sides assess the ruling and plan next moves.
Ant and Dec, Robbie Williams, Guy Ritchie and Andrew Lloyd
‘Trading with a view to profit’
Webber were also among 140 celebrities who pumped money into the schemes which give tax breaks to film investors.
Stars typically invested between £160,000 and £1.4million into the schemes, which helped to produce films such as Avatar and Die Hard 4.
The case dates back to the early 2000s when ‘sideways loss relief’ rules were still permitted. This allowed investors to offset their potential tax bill against losses they made in other areas of business.
On Wednesday the Court of Appeal backed two claims by Ingenious Media.
The ruling reinstated a judgment made by the First-Tier Tribunal (FTT) in 2017 which means 4 per cent of the £700million bill cannot be claimed by the taxman. But HMRC has insisted that 96 per cent can still be recouped following earlier rulings. This judgment had been overturned in 2019 by the Upper Tier Tribunal but this was quashed by the latest ruling.
In 2016, HMRC said the schemes amounted to ‘tax avoidance’ as they tried to use ‘artificial losses’ to avoid £568million of tax.
But Ingenious said the schemes allowed for ‘tax deferral’ since investors would start to pay the top rate of tax once the partnerships began making money.
Now the Court of Appeal has declared the partnerships were trading with a view to profit and so were not set up for tax avoidance purposes. It also barred HMRC from appealing against the decision to the Supreme Court. Ingenious said: ‘We are very pleased that the Court of Appeal reversed the findings of the Upper Tier Tribunal and ruled that our film partnerships were, as we have always contended, trading with a view to profit.’
In 2017, Lineker faced online criticism for his involvement in the scheme. In a series of tweets, the former footballer denied any involvement in the case, saying: ‘Coughed up years ago sorry to disappoint. I happily pay all taxes due, in full and on time. Contrary to stories, I have no legal involvement in any related court case.’