Film Scheme Dispute Heard In Supreme Court

The highest court in Britain is set to hear a legal case brought by film scheme investors this week.

The Supreme Court case has been brought by investors into the Eclipse 35 film scheme, which includes many key City figures, celebrities and sports stars.

Film schemes were set up by the previous government in order to encourage investment into creative works. Individuals were offered incentives of tax relief by investing into the film production process, namely distribution and licensing rights, often by way of a loan. Individuals were then able to claim tax relief on the interest of the loans they took out.

In order for investors to qualify for tax relief, a condition of the film scheme was that it must have carried out a trade. In the case of Eclipse 35, HMRC argues that the scheme never actually traded and therefore acted purely as a tax avoidance scheme to benefit wealthy investors.

Over the last 12 months film schemes have received criticism in the press and among MPs, with a number of high profile individuals having been named as benefiting from huge tax savings as result of their investments.

With HMRC continuing to clampdown on tax evasion and tax avoidance, it has targeted a number of tax avoidance schemes, such as film schemes and the individuals who have invested in them in order to recover the unpaid tax. In some cases, individuals will have been issued with Accelerated Payment Notices (APNs) which required almost immediate payment of the amount of tax HMRC believed to be owed.

This case is not the first legal case involving film schemes to be disputed, and HMRC has been urged to get tougher by considering criminal convictions in extreme cases. Whilst HMRC and the government will continue in its fight against tax evasion and tax avoidance in the UK, many investors will be seeking legal advice against the advisers who promoted such tax avoidance schemes in the first place.

We have assisted a number of individuals who have invested in disputed tax avoidance schemes in order to assist them through a voluntary disclosure to clarify their tax liabilities.

To discuss your circumstances in complete confidence with a member of our tax investigations team you can call us on 0113 387 5670 or fill out an Enquiry Form and we will contact you straight away.