HMRC scores another win in film tax battle

Added 17th March 2017

HM Revenue & Customs has extended its run of victories against schemes seeking to exploit tax breaks for the UK film industry.

HMRC scores another win in film tax battle

The latest court case was against two film partnership schemes that acquired interests in films that included The Queen and the Roman Polanski remake of Oliver Twist, and prevented the loss of £26m ($32m, €30m) of taxpayers’ money.

No trading

The Court of Appeal dismissed appeals from Proteus Film Partnership and Samarkand Film Partnership, upholding a previous judgment that they were not trading and no tax relief was due.

The film partnership schemes were marketed to wealthy people, many of whom were resident but not domiciled in the UK. The arrangements sought to allow scheme users to get an upfront repayment on the tax reliefs and escape tax on the income generated.

The court agreed with HMRC’s view that the partnerships were not trading and there were never any losses available to investors to reduce their tax bills.

HMRC said the decision could potentially impact on other cases worth £286m as the tax office already warned film scheme investors that they face payment demands up to 10 times the value of their initial investment.

Director general of customer compliance for HMRC, Jennie Granger said: “This scheme deliberately sought to exploit the tax reliefs put in place to help boost the British film industry, but it didn’t pay off. We’re delighted with the win which means we’ve protected £26m of taxpayers’ money.”

HMRC is building a strong record of wins in avoidance cases, succeeding in about 80% of the cases it takes to court, with many more settling before reaching that stage.

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Richard Hubbard

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Richard Hubbard is the group editor at Last Word. He is responsible for the editorial content of International Adviser, Portfolio Adviser, Expert Investor and Fund Selector Asia. Richard previously worked for Thomson Reuters and has covered the financial services industry and investment themes from its offices in London, Singapore, Hong Kong and New York. Richard started his career at the Australian Financial Review in Sydney.

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