TAXMAN 1 STARS 0; FOOTBALLERS & CELEBS LOSE OUT Company fails in appeal over PS450m scheme.
Byline: KEITH MCLEOD firstname.lastname@example.org
THE taxman has won a significant victory in a PS450million avoidance scheme invested in by celebrity high-earners including David Beckham, Ant and Dec and Jeremy Paxman.
The scheme, run by Ingenious Media, involved financing more than 60 films such as Avatar and Brooklyn.
After what is thought to be the longest tax tribunal appeal ever, Ingenious lost its fight to overturn an earlier ruling in HM Revenue and Customs's favour.
The case centres on HMRC claims of tax liabilities related to film and game investment schemes promoted by the firm. Rich investors joined the scheme where tax liabilities could be offset against movie industry losses.
Other movies involved included Life of Pi and Die Hard 4, between 2000 and 2013.
Celtic chief Peter Lawwell, manager Neil Lennon and other former Parkhead stars were also members.
The case at the Upper Tribunal was heard for over three weeks this spring.
In 2016, a Daily Record investigation revealed the Hoops chief executive, along with several former players and managers, invested in a number of controversial film partnerships set up by the London firm.
HMRC branded the Limited Liability Partnership (LLP) schemes as sophisticated tax avoidance.
Investment in the LLPs was promoted by members of the Ingenious Media Group 25 (Ingenious) to individual high-net worth investors. HMRC issued multimillion-pound bills to hundreds of Ingenious clients after winning an initial tax tribunal victory in 2016.
While some settled bills, others have held out to await the final outcome.
Ingenious will be allowed to appeal the decision, but those who joined the scheme and have not settled with the taxman will face huge bills and interest and penalites if the appeal fails.
Companies House records show Lawwell and former manager Martin O'Neill became members of Ingenious's Inside Track 3 LLP in 2004. Lennon was a member of Ingenious Film Partners 2 LLP between 2006 and 2011.
HMRC said: "This win defeats eight avoidance schemes which used film or games investments to create losses.
"Those who chose to take the case to court are now worse off than those who settled with us."
As well as about PS450million in unpaid tax, the sum finally recovered by HMRC could add hundreds of millions of pounds in interest and penalties.
Ingenious said: "We are disappointed by this decision. We believe it ...
misunderstands how the film industry operates."
HMRC said the arrangements were designed to generate first-year losses and facilitate claims by investors for sideways loss relief for those losses.
Lennon put PS200,000 into the partnerships in 2003 after being told it would save him almost PS500,000 in income tax.
But he only got PS80,000 of his cash back.
INGENIOUS INVESTOR David Beckham
MEMBERS Lawwell and Lennon
TAX HITS Ant and Dec and, left, Jeremy Paxman
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|Publication:||Daily Record (Glasgow, Scotland)|
|Date:||Aug 2, 2019|
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