A film scheme backed by former England and Manchester United football managers Sven-Goran Eriksson and Alex Ferguson has been defeated in the Upper Tax Tribunal.
Eclipse 35 was a limited liability partnership promoted by Future Capital Partners which claimed to enable its partners to obtain tax relief on their general income. HM Revenue & Customs (HMRC) had won a case against the scheme in the First Tier Tribunal, claiming the tax reliefs did not work. The scheme appealed that decision, but has now been handed a further defeat in the Upper Tribunal.
A number of celebrities invested in the scheme alongside Ferguson and Eriksson.
HMRC said 31 related partnerships would be affected by the judgment, representing around £600 million in tax.
Exchequer secretary David Gauke said: 'The government wants to support and encourage genuine business investment through the tax system, which is why we have tax reliefs.
'However, we will not stand for abuse of those reliefs and HMRC will come down hard on anyone who tries. In this case, anyone who used the scheme to try to avoid tax will have to pay tax on the income from the scheme, meaning they are worse off than if they'd never used it. The message is clear - if it looks too good to be true, it probably is.'