A film producer and accountant have been jailed for a total of 14 years for exploiting a loophole which has cost the taxpayer millions of pounds.
Southwark Crown Court heard that Terence Potter, 55, set up two film companies and recruited wealthy investors by promising they could secure tax relief against any losses the companies made.
Potter was the brains behind Cardiff’s Aquarius Films – which holds distribution rights to George Clooney’s 1999 blockbuster Three Kings - and is responsible for a series of movies.
The former tax partner at Ernst & Young recruited certified financial planner Neil Williams-Denton, 42, to help him set up the swindle and recruit additional investors.
The first company produced the indie hit ‘Starsuckers’ about celebrity culture and the tabloid press. A second firm planned to create ‘Mercedes the Movie’, a thriller about motor racing on the French Riviera, but was never made.
The government scheme known as ‘sideways relief’ was launched by the then chancellor Gordon Brown in his 1997 budget to promote the British film industry, allowed investors to claim back 40 per cent of the company’s losses from their PAYE tax.
Potter and Williams-Denton let investors share in the tax relief on the fraudulent losses of £4m losses the company presented to HMRC between 2007 and 2010.
Described as ‘the most widely exploited tax credit in British history’, the scheme offered investors the chance to recoup £40,000 in tax relief for every £20,000 they paid into the scheme.
Potter, a multi millionaire living in Monaco, admitted cheating the public revenue, while Williams-Denton was convicted of a similar charge after a nine-week trial at Southwark Crown Court.
Four RBS bankers – Jason Edinburgh, 48, Vincent Walsh, 53, Assad Amin, 43, and Michael Elsom, 48 – were accused of investing in the scheme but a jury cleared them of any involvement.
Williams-Denton was previously convicted of the same charge at a separate trial in September in relation to the film investment company behind Starsuckers. Three other investment bankers were convicted in September alongside Potter and Williams-Denton of a similar charge of cheating the public revenue relating to the Starsuckers investment vehicle.
Potter was sentenced to eight years imprisonment and Williams-Denton was sentenced to six years. Judge Martin Bleddoe described them as “deeply dishonest individuals”.
“I am quite sure from all the evidence I have heard over three trials and many months that only a part of the money put up by investors was used for filmmaking purposes.
“The main purpose of those schemes was to line your pockets and provide your clients with a route to substantial tax relief, you are both deeply dishonest individuals.”
Solicitor Paul Schofield, acting for Williams-Denton, said in a statement: “My client maintains his innocence and we have already started the process of appealing against the convictions and sentence.”
During the trial, Richard Fisher QC, defending, said Potter had campaigned for justice after his daughter died in a tragic water sports accident.