Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Beckham-backed film scheme loses £700m tax battle

Beckham-backed film scheme loses £700m tax battle

A film scheme backed by a host of football stars and celebrities has lost a court battle to overturn a £700 million tax bill. 

The Ingenious Film Partners 2 LLP scheme attracted around 1,400 stars, including Manchester United footballer Wayne Rooney, alongside former footballer stars David Beckham and Gary Lineker. TV double act Ant and Dec and ex-Newsnight host Jeremy Paxman were also among the scheme's backers. 

The investors each paid a minimum of £100,000 into the scheme, which offered tax breaks in return for helping fund box office hits. Life of Pi, Avatar and Girl With a Pearl Earring, were among the blockbuster films Ingenious helped bring to the big screen. 

Film Partnership schemes were introduced by the government to encourage British film production and in turn generate considerable revenue for the UK economy.  The majority were invested in between 2004-2007 when Gordon Brown was prime minister. 

However, HM Revenue & Customs (HMRC) has since judged that these vehicles were used as method to avoid tax. Last August a court ruled investors should only receive tax relief on 30% not 100% of their investment.

The tax office had argued that production costs associated with making the films were capital costs, meaning investors were not due any tax relief on this either.

Ingenious said it 'strongly disputed this interpretation on the basis that it was completely at odds with the whole thrust of a very lengthy and closely argued judgment'.

After declining to overturn last summer's original ruling, tribunal judge Charles Hellier admitted it was a tough call. 'We have not found this an easy decision, and are comforted by the fact that others have had similar difficulties with the concept of capital.' 

HMRC said: 'We are pleased that the tribunal has agreed with us that the vast majority of what was claimed in tax relief by Ingenious investors was simply not due.'

Ingenious said it would appeal the ruling: 'We strongly disagree with the tribunal’s clarification of a technical matter from its summer 2016 ruling,' a spokesperson for the firm told reporters. 

'It is wholly unsatisfactory that the tribunal reached this decision with ‘misgivings and reluctance’. We will be appealing the entire decision of the tribunal.'

 

 

 

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Wealth Manager Retreat 2017: size isn't everything

Wealth Manager Retreat 2017: size isn't everything

We asked our delegates at the Wealth Manager Retreat what they think about the recent wave of consolidation in the industry.

1 Comment Play CIO Tapes - part 3: 'passive funds are anti-capitalist'

CIO Tapes - part 3: 'passive funds are anti-capitalist'

Citywire recently gathered three of the UK's leading fund investment heads to discuss their hopes, fears and the issues that their jobs throw at them daily.

Play CIO Tapes: do investors have it as good as it gets?

CIO Tapes: do investors have it as good as it gets?

Citywire gathered three of the UK's leading fund investment heads to discuss what they fear and what makes them cheer about the year ahead

Read More
Your Business: Cover Star Club

Profile: from managing Brunei’s billions to Dorking’s pension pots

Profile: from managing Brunei’s billions to Dorking’s pension pots

Mole Valley Asset Management's boss on why he chucked in multi-billion mandates for Surrey wealth management

Wealth Manager on Twitter