Celebrities, such as British composer Andrew Lloyd-Webber, athletes and bankers are among the 500 investors suing film investment firm Ingenious Media, according to reports.
Investors claimed they were misled about investments in the film industry that were deemed tax avoidance by the government, Bloomberg reported.
According to court documents, celebrities, as well as dozens of traders and managers from Goldman Sachs, Lloyds Banking Group, HSBC Holdings, Credit Suisse Group AG and other banks, were said to be among the claimants.
Ingenious Media, whose movies include the Life of Pi and Avatar, ran investment plans focused on films that were designed to be tax efficient, according to court documents.
Investors say, however, that Ingenious Media “made representations of fact which were false and which they had no reasonable grounds for believing were true” while promoting the plans. This induced the claimants into joining the plans and losing money, they said.
Stewarts Law head of tax litigation David Pickstone, who is representing the claimants, said they expect to recover around £200m on behalf of around one in four original investors in the fund.
HMRC has aggressively challenged the use of film funding tax breaks in recent years, successfully arguing in a number of cases that they have been used as vehicles for tax avoidance.
Patrick McKenna, chair of the company – which has been accused by lawyers for HMRC of running a tax avoidance scheme – told Bloomberg the claims were “without merit and will be vigorously defended”.