Film schemes
HMRC has declared victory over several film schemes over the past few years.
One example being the Eclipse schemes, originally designed by HSBC, boasted investors such as Sir Alex Ferguson and Sven-Goran Erikson.
Eclipse paid £503m to acquire the distribution rights to the Disney films which it then immediately sold to another member of the Disney Group for a payment of £1.02bn spread over a 20-year period – an arrangement HMRC described as “a sophisticated financial model”.
Around 780 investors poured £2.2bn ($2.7bn, €2.6bn) into the schemes.
Eclipse came to the attention of HMRC after it found that the partnership had not conducted any trades, which is a prerequisite to qualifying for any tax relief.
The UK taxman and Eclipse partnership have been locked in a prolonged appeals battle, which eventually landed at the Supreme Court in April 2016. The court quashed Eclipse’s final appeal in April, which means no further appeals can be brought.
Payment demands were expected to be sent to investors in early 2017, with requests for the repayment of any tax relief plus an additional liability related to the income tax paid on the income of the film production company.
This could see investors with a £200,000 initial investment hit with a tax bill of £2m or higher.
