Two film partnerships have lost an appeal to claim tax relief on their losses after the upper tribunal ruled that they were not run for commercial purposes.
To receive tax relief on their expenditure, the partnerships [Samarkand Film Partnership No 3, Proteus Film Partnership and three partners v HMRC], which acquired and leased films produced films including The Queen, for which Helen Mirren received a Best Actress, had to prove that their fees were an expense incurred “wholly and exclusively for the purpose of the trade.”
In 2011, the partnerships lost a case in the first tier tribunal, which ruled that they were not done on a commercial basis and so not entitled to the tax relief.
The judge said some of the business practices of the partnerships was “sloppy” and queried Samarkand’s title rights to The Queen.
The upper tribunal agreed and said it was reasonable for HMRC to believe that the film schemes were designed to avoid tax.
About Nick Huber
I’m a specialist business journalist and have a particular interest in tax and technology.