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HMRC arrests bankers in film finance probe

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13th Feb 2012
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Officials from HMRC have carried out several raids after looking into allegations that City bankers took part in a tax fraud that exploited a film finance loophole.

Around 16 people are thought to have been arrested in the Revenue’s latest wave of tax fraud arrests. 

HMRC has denied the existence of a specific taskforce or team that’s tackling this area, but said the arrests were “routine criminal investigation work”.

HMRC declined to go into detail about the film finance schemes, but said: “‪As a result of an ongoing HMRC investigation into tax-related criminal offences, HMRC has arrested a number of people, some of whom work for UK banks.”

It has been widely reported in the City press that four current and one former member of staff at the investment banking arm of RBS, as well as London workers from US bank Jefferies and commodities broker Marex Spectron, are believed to have been held.

John Cassidy, tax investigations partner at PKF, said: “My guess would be that HMRC believes they're over-inflating the relief somewhere along the lines.”

“For HMRC to go to the trouble and use the resources for the raids and arrests, it’s not something that’s a technical argument – HMRC believes that somebody has been doing something deliberately. The amount of raids HMRC carried out every year you can count on one hand – it’s a labour-intensive, time-consuming exercise. If it’s a loophole there are far better ways of handling it.”

HMRC recently launched a series of crackdowns to ensure wealthy people, including footballers and property dealers, pay sufficient tax as the Treasury struggles to cut the deficit.

The arrests were in connection with the financial affairs of the individuals rather than their employers.

In November last year a first tier tribunal decision that two film partnerships were not undertaken on a commercial basis and therefore not entitled to sideways loss relief suggested that the curtain was falling on a once popular tax avoidance strategy.

The declining popularity of film partnerships is playing out in a series of tax tribunals, one involving celebrities and wealthy individuals including Sir Alex Ferguson who have used them as vehicles to offset tax losses.

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By johnjenkins
14th Feb 2012 10:11

We go from

"once popular tax avoidance strategy" to "tax related criminal offences". I don't see how the two are related. Love to know more but I suppose we will only get snippets here and there.

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