No artful dodge for film scheme

Fri 2nd Jun 2017

HM Revenue & Customs (HMRC) has won a tax avoidance case against film partnership schemes that acquired interests in films that included The Queen and the Roman Polanski remake of Oliver Twist, protecting more than £26m of taxpayers’ money.

The Court of Appeal dismissed appeals from Proteus Film Partnership and Samarkand Film Partnership, upholding a previous judgment that they were not trading andno tax relief was due.

The film partnership schemes were marketed to wealthy people, many of whom were resident but not domiciled in the UK. The arrangements sought to allow scheme users to get an upfront repayment on the tax reliefs and escape tax on the income generated.

The court confirmed HMRC’s view that the partnerships were not trading and there were never any losses available to investors to reduce their tax bills. The decision could potentially impact on other cases worth £286 million.

Director General, Customer Compliance, Jennie Granger said:

“This scheme deliberately sought to exploit the tax reliefs put in place to help boost the British film industry, but it didn’t pay off. We’re delighted with the win which means we’ve protected £26m of taxpayers’ money.”

HMRC has an excellent record of wins in avoidance cases, winning around 80% of cases taken to court, with many more settling before reaching that stage.