A large number of celebrity investors in the ill-fated Eclipse film investment scheme are preparing a £100m legal action against Barclays, Bank of Ireland, HSBC and Disney, alleging they misrepresented the chances of the scheme delivering the promised tax breaks, according to press reports. The Upper Tribunal upheld the decision of the FTT in Eclipse Film Partners (No 35) LLP v Revenue and Customs Commissioners [2014] STC 1114, finding that the partnership was not carrying on a trade and no relief was due for interest paid on loans taken out as part of the scheme.
Miles Dean, managing partner at Milestone International Tax, is clear that the scheme was flawed. ‘The “investments” were not really investments. They were designed to create losses (an investment usually produces a return) against which income could be offset,’ he said. Given the complexity of film schemes, ‘it is very likely that many of those investing were completely unaware of the associated tax risks,’ Dean added.
He is less certain about their chances of success in court, however, as it is ‘highly likely that all the investors will have signed waivers, so the burden of proof will be very high’.
In September, it was reported that a group of former Premier League footballers were suing the professional advisers linked to the Ingenious Media film investment scheme, following HMRC’s defeat of the scheme at the tax tribunals.
A large number of celebrity investors in the ill-fated Eclipse film investment scheme are preparing a £100m legal action against Barclays, Bank of Ireland, HSBC and Disney, alleging they misrepresented the chances of the scheme delivering the promised tax breaks, according to press reports. The Upper Tribunal upheld the decision of the FTT in Eclipse Film Partners (No 35) LLP v Revenue and Customs Commissioners [2014] STC 1114, finding that the partnership was not carrying on a trade and no relief was due for interest paid on loans taken out as part of the scheme.
Miles Dean, managing partner at Milestone International Tax, is clear that the scheme was flawed. ‘The “investments” were not really investments. They were designed to create losses (an investment usually produces a return) against which income could be offset,’ he said. Given the complexity of film schemes, ‘it is very likely that many of those investing were completely unaware of the associated tax risks,’ Dean added.
He is less certain about their chances of success in court, however, as it is ‘highly likely that all the investors will have signed waivers, so the burden of proof will be very high’.
In September, it was reported that a group of former Premier League footballers were suing the professional advisers linked to the Ingenious Media film investment scheme, following HMRC’s defeat of the scheme at the tax tribunals.
