That's a wrap: Taxman wins big on film tax case

 
Hayley Kirton
Follow Hayley
General Views Of Government Ministries Around Westminster
Avatar and Life of Pi are just two of the films caught up in the legal drama (Source: Getty)

HM Revenue & Customs (HMRC) had reason to celebrate late last week, when it won two tax avoidance scraps worth more than £820m combined in tax owed and interest.

HMRC announced on Friday it had successfully argued a scheme by Ingenious Film Partnership had attempted to use artificial losses generated from investments in blockbusters, including Avatar, Life of Pi and Die Hard 4, while a scheme by Icebreaker had tried to create artificial losses from investments in limited liability partnerships.

However, Ingenious has since taken issue with the way HMRC has lumped the two cases together, contesting that some of the issues brought to light by the Icebreaker scheme did not apply to its actions.

In particular, Ingenious argued its investors had not received more tax relief than they had invested, while all of the legal costs of the case had been covered by the company. Ingenious also argued its participants were in a better place now than they would have been had they accepted an early deal four years ago.

A HMRC spokesperson said:

Last week, the tribunal courts ruled in HMRC's favour and we won two major tax avoidance battles against Ingenious Film Partnership and Icebreaker avoidance schemes. Both schemes saw users claim tax relief in respect of losses that exceeded the cash they had invested.

Ingenious also noted it felt aspects of the decision were based on "a number of arbitrary and subjective interpretations and are unreasonable". The company added it was currently taking a closer look at the judgment and was considering whether to launch an appeal.

Related articles