Tax scheme fails

Book a Free Consultation
Or call us on 01604 660661

A widely publicised tax avoidance film scheme marketed to wealthy Britons, simply didn’t work, the Tax Tribunal has ruled, reports Chartered Accountants Northampton Harris & Co.

The Tribunal ruled that the scheme – which was based on buying and selling film rights and marketed by Goldcrest Pictures Limited – failed to live up to its promises.

In a statement issued on the ruling, HMRC said that users of the scheme not only had to pay tax owed with no relief at all for the money they put into the scheme, but also ended up out of pocket as a result of paying fees to the company.

Goldcrest was responsible for a string of critically and commercially successful films including Gandhi, The Killing Fields, Chariots of Fire and A Room with a View.

HMRC said that a Goldcrest company, based in the British Virgin Islands, sold rights in two feature films for an artificially inflated figure of £21.9m to hedge fund manager Patrick Degorce, who only required to pay £4.8m of his own money.

Degorce immediately sold the rights back to the same Goldcrest company for a fraction of this price – claiming that the difference was a trading ‘loss’. He aimed to set this ‘loss’ against £18.8m profits of his hedge fund – so he wouldn’t have to pay any tax on them.

Commenting on the ruling, David Gauke, exchequer secretary to the Treasury said the government has made it clear that it will not allow marketed avoidance schemes to deprive the UK of vital tax revenues.

Gauke said:

‘We have invested nearly £1bn to help HMRC take action against the minority of taxpayers who think they are above the law, we are bringing in new anti-avoidance legislation and we are giving HMRC greater powers to clamp down on those who sell dubious avoidance schemes like this one.’

‘The Tribunal’s ruling in this case sends a clear message to anyone tempted to buy into this type of scheme’

HMRC director general for business tax, Jim Harra, said:

‘This is another film scheme which has delivered none of the tax benefits promised by the promoter. Mr Degorce put in nearly £5m of his own money, including £1.6m which went into the promoter"s pocket, but all he has come away with is an HMRC enquiry and an appearance before a tax tribunal.’

‘Sadly, many people have been tempted by similar schemes which we also believe don’t work, and we have opened a settlement opportunity to get them back on the straight and narrow. I would urge anyone in this position to sign up for this facility quickly.’

The scheme included 11 other individuals with total combined losses of £47.6m – which put £17.7m tax at risk.

Follow Us