An unknown number of Canaccord Genuity clients have taken steps that could see them meet the firm in court over potential tax liabilities relating to the use of film partnership products.
In its quarterly statement, Canaccord revealed an undisclosed number of clients have launched two pre-action protocols against the firm.
The protocols encourage the parties to settle disputes using alternative dispute resolution methods, such as mediation. However, they also provide information about how the issue can be dealt with quickly if it does end up in civil court.
A company spokesperson told International Adviser: “Please note that the advice related to these investments was given at a time that preceded our firm’s acquisition of a small wealth management operation and impacts only those clients that had made investments in specific film partnerships.
“Importantly, our clear view is that clients have received appropriate advice and support in respect of these investments.
“The arrangements in question were all backed up by independent, expert advice and outside opinions and clients were fully supported in understanding the nature and risks of the investments that they made,” the spokesperson said.
$22.7m in tax deferrals
According to Canaccord’s quarterly statement, the film scheme products were purchased between 2006 and 2009 and, at the time, attracted a total investment of $15.2m (£8.8m), creating initial tax deferrals of $22.7m (£13.1m).
The firm said investments in the products may result in tax liabilities in excess of the initial tax deferral, following “announcements from the UK taxation authority [and] the outcome of certain litigation proceedings in respect of the taxation of other similar products sold by other financial advisers and certain settlements reached with the UK taxation authority”.
“The potential tax liability for those clients engaged in such pre-action protocols, which is in excess of the initial tax deferral amount, is approximately $15.6m (£9m) excluding other costs,” the Canaccord statement said.
The firm said it intends to “vigorously defend itself” if claims are advanced, and believes that such claims would be without merit.
However, it added it may be required to record a provision for an adverse outcome which could have a “material adverse effect” on the company’s financial position.
Footballers and film schemes
In January, International Adviser reported that celebrities, including Premiership footballers, embroiled in the failed Ingenious Film scheme had lost their tax relief appeal with HM Revenue and Customs.
The group is said to include dormer footballer David Beckham and TV presenter Davina McCall invested a minimum of £100,000 ($129,984, €112,352) in Ingenious Film Partners 2 LLP.
