According to the tax office investigation, Hayley, Bevan and Savill falsified paperwork to deliberately mislead HMRC officers.
They arranged for companies, such as Guernsey-based Fat Cat Films, to be registered in the British Virgin Islands that supposedly operated in Monaco, Geneva and the Channel Islands. In fact, they were all fronted by the fraudsters’ family friends in the Philippines and Kolkata.
Each firm did little more than pass investor funds through their bank accounts, from one to another numerous times, to inflate the amount invested and therefore the scheme’s losses.
‘Huge win’ for HMRC
Dawn Register, partner at BDO, a firm that specialises in resolving tax disputes with HMRC, described the ruling as a “huge win” for the tax office, adding that it sent out a “clear and strong message” that those operating ‘dodgy’ tax schemes will be held accountable.
“The four individuals who signed up investors into what may have looked like legitimate tax planning at the time, are now likely to face lengthy prison sentences. This case shines a spotlight on some of the practices which are now proven to be illegal – the clue being in the offshore company named ‘Fat Cat Films’,” she said.
Register said the judgement will “add gravitas” to the ongoing legal disputes over similar schemes.
The ruling comes just months after HMRC won an appeal at the Supreme Court over £117m tax relief claimed by a film scheme involving the distribution rights to two Disney films. As a result, celebrity investors including Manchester United manager Alex Ferguson and ex-England coach Sven-Göran Eriksson now face a combined tax bill worth over £635m.
She urged investors to resolve their tax position with HMRC before April 2017, after which they could be subject to its new ‘naming and shaming’ laws.
“This decision will cause considerable woes to those caught up in tax avoidance enquiries with HMRC,” said Register of the new legislation.
