Film partnership scheme loses tax appeal

Investors in a film-investment scheme face a large tax bill after an upper tier tax tribunal ruled that "Eclipse 35" does not deliver the tax relief it claimed.

The firm is one of 31 related avoidance partnerships with over £600m in tax at risk, HMRC said. The scheme - which reportedly involved investors including sports stars and City figures - was first used in 2006-07.

Eclipse 35 was an LLP and claimed to enable its 287 partners to obtain tax relief on their general income through a complex series of...

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Comments

Holier than though    1 thanks

moneymanager | | Permalink

However, we will not stand for abuse of those reliefs ... In this case, anyone who used the scheme to try to avoid tax will have to pay tax on the income from the scheme, meaning they are worse off than if they’d never used it. The message is clear – if it looks too good to be true, it probably is.”

 

Quite right, abuse of these reliefs should not and have never been tolerated.

Rightly either or both the DCMS and HMRC would routinely challenge the films eligibility or teh tax compliance.

Without knowing the detailed specifics of this scheme it is impossible to judge the degree to which the scheme promoters, advisers or clients actually where attempting abuse.

These schemes always were complicated and, in the main, fastidious in their construction. Ultimately, HMRC does not make the law or enforce it. That role belong to the courts and these cases can and do hinge on minutiae. HMRC winning a case DOES NOT of neccessity mean that abuse occured or was intended by any party.

By the way, in Sale and Leaseback schemes income tax always was going to be paid on the income (offset in large measure by the loan interest) and thus were never tax avoidance but simply tax defferal. Deffered at 40% and repaid at 45%; that must have pushed up the hurdle rate a bit.

A little more truth and honesty and less grandstanding would help restore HMRC's reputation; maybe.