Eclipse Film Scheme Tax Avoidance

The Court of Appeal has reached a landmark ruling the case of alleged tax avoidance in relation to the tax avoidance scheme Eclipse Film Partners No 35 LLP.

It has been ruled that investors, such as Sir Alex Ferguson and Sven Goran Eriksson, are not entitled to claim tax relief on the interest of the money they borrowed to invest in the scheme. The money they invested was supposed to be used to trade in film rights. However, a judge ruled that Eclipse Film Partners No 35 LLP was not carrying out any ‘trading transactions’.

Investors were alleged to have been able to offset the interest on the money they borrowed for the film scheme investment against other income, therefore reducing their tax liability.

Following the ruling, almost 300 investors now face tax bills from HMRC which could be significantly higher than the amount they invested in the first place.

Film tax credit schemes were introduced by the Labour government to encourage investment into the British film industry. However, they caused controversy as those that did invest would be able to benefit through taking tax relief.

The recent decision could set a precedent for ruling on other film investment schemes that have been alleged to have assisted in tax avoidance. HMRC will be delighted with the victory as it will now be able to start recovering money from investors in the Eclipse 35 Scheme.

If you have invested in a film scheme such as Eclipse 35, the time to act is now, before you fall onto HMRC’s radar. You can discuss your circumstances in complete confidence with one of our tax investigations professionals. We will be able to explain the potential options open to you in order to make a voluntary disclosure to HMRC.

For advice and assistance in relation to tax investigations and voluntary disclosures in complete confidence, call us on 0113 387 5670 or fill out an Enquiry Form and we will contact you straight away.