George Osborne's plan to grab millions of pounds of tax back from a host of high-profile City names was criticised yesterday as concerns grew over the impact of tough new tax rules.
Mark Field, Conservative MP for the City of London, said: “To take a retroactive approach to schemes that have already been approved seems wholly wrong.
“This could set a precedent that could be used much more aggressively in future. I’ve got no problem with rules saying that in the past we’ve been overly generous but to claw back money from schemes from many years ago creates a lot uncertainty and that’s not good for the UK economy.”
Osborne has introduced new laws allowing Her Majesty’s Revenue & Customs to hit investors who put money into a film funding scheme with a retrospective tax bill.
HMRC will start demanding cash from investors – which include Centrica boss Sam Laidlaw, Bank of England’s Clara Furse, along with footballers David Beckham and Wayne Rooney – from Monday once the rules kick in.
The company that ran the film fund, Ingenious Media, called the decision “de facto retrospective, indiscriminate and unfair”.
The long-running saga has come to a head following the introduction of so-called “accelerated payment notices”, which let HMRC demand quick payment.
A tribunal hearing scheduled for November will rule on the decision but HMRC has already asked some members of the film funding scheme, called Ingenious Film Partners 2, to settle and receive a discount.
The Ingenious Film Partners 2 fund has helped fund a host of Hollywood hits, including Avatar.
Howard Weintrob, tax expert at accountancy firm Jeffreys Henry, said those hit should take advice, adding: “The new proposed legislation is here to stay.”
Meanwhile, senior MPs yesterday told Lin Homer, the chief executive of HMRC, that the tax grab was “wholly unacceptable”.
During a grilling by the Treasury select committee, Tory MP Steve Baker said that he was “horrified” by the plan, while John Thurso, a Liberal Democrat, suggested that the reform would breach the Magna Carta.
Thurso said that HMRC was trying to become “judge, jury and executioner” and that it wanted to remove legal protections simply because it was “slow and expensive” to follow legal process.