HM Revenue & Customs has won a £26m tax avoidance case against film partnership schemes that acquired interests in films including The Queen and the Roman Polanski remake of Oliver Twist.
The Court of Appeal dismissed appeals from Proteus Film Partnership and Samarkand Film Partnership, upholding a previous judgment that they were not trading and no tax relief was due.
The decision could potentially impact on other cases worth £286m.
HMRC’s director general for customer compliance, Jennie Granger, said: “This scheme deliberately sought to exploit the tax reliefs put in place to help boost the British film industry, but it didn’t pay off.
“We’re delighted with the win which means we’ve protected £26m of taxpayers’ money.”
The film partnership schemes were marketed to the wealthy, many of whom were resident but not domiciled in the UK.
The arrangements sought to allow scheme users to get an upfront repayment on the tax reliefs and escape tax on the income generated.
The court confirmed HMRC’s view that the partnerships were not trading and there were never any losses available to investors to reduce their tax bills.
HMRC has won around 80 per cent of avoidance cases taken to court, with more settling before reaching that stage.
Last year HMRC claimed victory in a court case against film partnership Ingenious because while it technically lost, the court reduced the amount of money investors could claim back through tax, leaving many significantly out of pocket.
damian.fantato@ft.com
