Almost 800 investors, including many wealthy and famous individuals, are facing tax charges of as much as 20 times what they invested in schemes that HM Revenue & Customs has declared were strictly designed to avoid tax, The Times has reported.
According to The Times, the investors – who it says included former Manchester United football club manager Sir Alex Ferguson, former England managers Sven-Göran Eriksson and Glen Hoddle, and former Sainsbury’s chairman Sir Peter Davis – were among 780 investors who poured £2.2bn into film investment schemes” and now “claim they face bankruptcy” after HMRC disallowed the schemes as genuine investments, The Times said, in a Page 1 story in its Saturday edition.
Nick Wood, an adviser representing hundreds of investors in one of the investment vehicles in question, known as Eclipse scheme, was quoted in The Times’s story as saying that he believed there would be “people potentially jumping off bridges” as a result of the tax bills they’re going to be hit with.
“My expectation is, out of the 780 people involved, I’d think it highly likely that up to 600 to 700 would go bankrupt,” he added, according to the newspaper.
“At least 70% would be forced into bankruptcy.”
The paper said HMRC will be sending out its demands for payment within two months, and that those who receive them will then have 90 days to pay up.
As reported, the UK Supreme Court ruled in April that Eclipse 35, one of the biggest of the film partnerships being offered to investors, was a tax avoidance scheme. Since then, according to The Times, that judgment has been used to pursue demands for investors in 38 similar film partnerships.
On Sunday, an HMRC spokesperson said in a statement: “Avoidance schemes are often highly contrived and almost invariably fall flat when trying to deliver a tax advantage never intended by Parliament. The fact is [that] the majority of schemes simply don’t work, and can put avoidance users in a significantly worse financial position than if they had never used the scheme in the first place.
“In the last two years, we have collected over £3bn from users of avoidance schemes, and have helped many people to enter into payment arrangements where they could not immediately pay the amount due.”
To read the story on The Times’s website, which has a paywall, click here.