Film tax scheme fraudsters jailed
Two Bafta-nominated film producers have been jailed for a total of nine years for their part in the £2.2m ‘Starsuckers’ tax scam.
Film producers Christopher Walsh Atkins and Christina Slater submitted vastly inflated invoices to take advantage of tax breaks on two independent UK projects in what HMRC called an ‘audacious attempt to defraud’,
The pair were convicted of conspiracy to cheat the public revenue, theft and fraud, and at Southwark Crown Court earlier this month Walsh Atkins was sentenced to five years in prison, while Slater was sentenced to four years. Both were disqualified from acting as a company official for 12 years.
Suspicious rebate claims
Accountant and former EY partner Terence Potter was convicted and jailed for eight years back in December for the plot, which saw him set up and sell two partnerships to investors with the intention to exploit a legal loop hole.
The scheme involved claiming false tax rebates linked to contrived investments in film-making partnerships.
The partnerships claimed to have spent £5.7m and made significant financial losses on two UK film projects, ‘Starsuckers’ and ‘Mercedes the Movie’. These artificial losses enabled the investors to falsely claim back £40,000 in tax relief for every £20,000 they had invested, and attempted to cheat the tax system out of a potential £2.2m.
An HMRC investigation identified a series of suspicious tax rebate claims, which investigators discovered had originated from two fraudulent tax avoidance schemes that had been set up and managed by Monaco-based Potter. The claims were supported by false documents produced by Potter.
Not ‘playing Robin Hood’
During the trial Walsh Atkins and Slater told the court they were using the proceeds to fund legitimate independent films, but on sentencing judge Martin Beddoe commented that it did not matter if the pair were buying a yacht or a Picasso.
"You were neither making nor playing Robin Hood”, said Beddoe. “What is not to be ignored is that both directly and indirectly you cheated the Revenue of large sums of money entirely for your own purposes and you put at risk the loss of even greater sums.”
The producers were nominated for a Bafta in 2008 for the film Taking Liberties, about the erosion of civil liberties.
An 'audacious attempt' to defraud
Commenting on the convictions Jennie Granger, HMRC’s director general, enforcement and compliance, called it an “audacious attempt” to defraud HMRC that was motivated by “the pure greed of dishonest and wealthy individuals”.
“The long sentences handed down send a powerful message to those tempted to deceive HMRC. Nobody is beyond our reach.”
More than 100 officers from HMRC's Fraud Investigation Service took part in the operation that led to the arrests in February 2012. The majority of the tax refunds claimed by investors were withheld and £500,000 which had been paid out initially has since been recouped. Investigations to recover further proceeds of the crime are under way.