Supreme court rejects Eclipse film appeal

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Britain’s Supreme Court has rejected a multimillion pound legal appeal case brought by Eclipse Film partners against HMRC over a film scheme.

Although Eclipse film partners (No35) claimed to trade in film rights, this verdict upholds the Court of Appeal’s ruling in 2015  that it was a tax avoidance scheme. David Gauke, Financial Secretary to the Treasury, called today’s ruling an “important victory for HMRC”, which HMRC says has protected £635m in tax.

HMRC said that the scheme operated by acquiring the rights to Disney films (Enchanted and Underdog) and then sub-leasing them back to a different Disney entity for a guaranteed income stream.

Almost 300 investors, including Sir Alex Ferguson and Sven-Gran Eriksson, poured money into the sch...

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About Nick Huber

Nick Huber profile image

I’m a specialist business journalist and have a particular interest in tax and technology. 

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14th Apr 2016 17:56

What

A surprise (not).

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15th Apr 2016 20:07

Substance over form

Clearly the spirit behind the scheme was to encourage taking risks re making films.  Not to provide a free tax break.

The people (firms and clients) who go about these kind of schemes ruin it for genuine users.

At least the Landscape of Lies case was funny.  And they did (sort of) make a film!

 

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18th Apr 2016 14:02

There's nothing like a bit of evasion

I have no truck with tax evasion and avoidance which used to be known as "planning" has only become a bete noir since politicians wilfully conflated the two but this isn't even that, it's deceit. Decit, that is, on the part of the HMRC. When Brown introduced the underpinning legislation the response from the film industry was a massive yawn. It was only following the "packaging" if you will into these schemes that the UK film production industry received the fillip that Brown intended and subsequently basked in and which has tanked following it's withdrawal. Certainly not all but the majority of such schemes gained NO tax enduring relief at all (unlike say VCT/EIS income tax relief) but solely a deferall of the tax due which would be fully repaid over the term of the arrangement (15-20 years if memory serves me). In fact, with the additional rate of tax many investors would have obtained initial relief at 40% and are now paying back at 45% plus the negative effects attaching thereto. It get's worse. HMRC having sought to dissalow the relief what is the investor now supposed to do with the income stream? Well, report it of course and it will be taxed. Fair enough but with no offset for the friggin loan repayment that generated it in the first place! That's not tax payer stumped, that's 1925 style bodyline bowling at it's worst.

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