Four men have been found guilty of a tax avoidance scheme which conned HM Revenue & Customs out of £100m.
The men falsely inflated the expenses of their film productions so investors could collectively claim tax repayments, but an investigation by HMRC discovered there was something suspicious about the scheme.
The men claimed to have spent more than £250m on pre-production and development packages for film projects created in Monaco, but an investigation found the packages had only cost £4m and had been created in London.
Overall, the gang falsely inflated expenses to more than £275m in order to increase the scheme’s financial losses, which enabled investors to collectively claim around £100m in tax repayments.
HMRC has said it will now begin to recover these repayments from the investors.
The scheme, created by Little Wing Films, said that for every £100,000 invested, higher-rate taxpayers would get £130,000 in tax repayments from HMRC.
It subsequently attracted investment from football players, investment bankers and a pop star.
Accountant Keith Hayley, 64, of London, and London-based financial advisers Robert Bevan, 55, and Anthony Charles Savill, 53, both of London, set up Little Wing Films to develop film projects.
They found more than 275 investors, who between them deposited more than £76m into the scheme, in the belief they were helping the British film industry and legitimately reducing their tax bill.
Norman Leighton, 67, an accountant and corporate services provider based in Monaco, helped create the pretence that more than £250m was being spent on genuine activity in Monaco.
Hayley, Bevan and Savill falsified paperwork to deliberately mislead HMRC investigators and to hide their fraud they set up offshore companies, including Fat Cat Films Ltd, falsely inflating the amounts invested into the scheme and the expenses paid out.
The men were found guilty at Birmingham Crown Court and are due to be sentenced on 24 June, having been charged with conspiracy to cheat the public revenue.
damian.fantato@ft.com
