Save content
Have you found this content useful? Use the button above to save it to your profile.

Film rights tax shelter shut down

4th Mar 2013
Save content
Have you found this content useful? Use the button above to save it to your profile.

A tax tribunal has ruled in favour of HMRC that a tax avoidance scheme marketed by Goldcrest Pictures failed to live up to its promise and “simply didn’t work”.

The latest in a long line of artificial film investment schemes was based on buying and selling film rights, where users not only had to pay the tax owed with no relief at all for the money they put into the scheme, but also ended up losing the money they paid into Goldcrest as fees.

Goldcrest sold rights in two feature films for an inflated figure of £21.9m to Kensington-based hedge fund manager Patrick Degorce who was 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”, which he aimed to set against £18.8m profits of his hedge fund so he wouldn’t have to pay any tax on them. Had he been successful, he would have pocketed £7.5m.

Jim Harra, HMRC director-general of Business Tax 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.”

Degorce has since indicated he will appeal against the judgment at the earliest opportunity.

Eleven other individuals used the Goldcrest scheme in its first year, and are also bound by the tribunal decision, with total combined losses of £47.6m risking £17.7m of tax.

The British Virgin Islands-based company, established in 1977, was responsible for a run of successful films including Gandhi, The Killing Fields, Chariots of Fire and A Room with a View.

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.