In the latest court case involving UK taxpayers who invested in a film partnership scheme, the UK’s top court today ruled against the investors, in what HM Revenue & Customs said was a ruling that would “potentially protect well over one billion pounds for the [UK’s tax coffers]”, in the form of setting a precedent.
The case, which dates back to 2011, involved two taxpayers, referred to in the documents as “R (on the application of De Silva and another)”.
According to a Supreme Court summary of the proceedings, these investors had “invested in and became limited partners of various partnerships in the implementation of marketed tax avoidance schemes”.
As an examination of the 14-page judgement reveals, the defendants sought to use technical and procedural points to make their case, but HMRC didn’t accept their arguments. And as today’s ruling points out, the Supreme Court justices didn’t buy their arguments either.
In a statement, HMRC said the ruling ensured that the two taxpayers involved in the lawsuit, as well as “others waiting for this ruling, will now have to pay their tax”.
“This is another great success in HMRC’s drive against tax avoidance,” added Jim Harra, HMRC director general for customer strategy and tax design.
Greater focus on avoidance
The case is the latest in a recent series of HMRC “wins” that have involved tax avoiders rather than tax evaders, reflecting the government’s response to last year’s Panama Papers exposé and other scandals and news reports that have highlighted the extent to which wealthy individuals in the UK and abroad have been found to avoid and evade tax through the use of complex investment schemes.
Last month, as reported, the London-based law firm Edwin Coe revealed that it was preparing a collective legal action on behalf of what it said were “hundreds of investors” – including some celebrities – against various parties that were involved in conceiving and marketing a film investment scheme that the UK Supreme Court ruled in April had actually been designed as a tax avoidance vehicle.
Some 780 individuals were said to have participated in that scheme, sheltering a total of £2.2bn in income.
Among the celebrities reported to have invested in the so-called Eclipse 35 film investment scheme were Sir Alex Ferguson, the former Manchester United manager, and Sven-Göran Eriksson and Glenn Hoddle, the former England managers.
The defendant organisations include Barclays, Bank of Ireland, HSBC and Disney, according to Edwin Coe.