In J Hardy and R Moxon v HMRC [2017] UKFTT 754 (16 October 2017) the FTT found that a film scheme failed as inter alia the partnership had not been trading.
The arrangements worked as follows. The appellants bought shares in a company the ‘PartnerCo’ funded with their own money and a non-recourse loan. The PartnerCo contributed the sum to the partnership as partner. The partnership used the funds (less a fee amount which went to the structurer Matrix) to buy a film meeting certain minimum qualitative criteria. At the time the film was bought the partnership entered into a distribution agreement under which it would receive an income. Finally the partnership entered into put and call options in relation to the film. The appellants sold their shares at a loss and claimed loss relief.
The first issue was whether the...
