The total damages for banks being sued in relation to a tax scheme that purported to invest in Disney blockbusters could top £1bn, according to a lawyer acting for the claimants.
HSBC and Bank of Ireland are being sued by a group of more than 700 investors in the Eclipse film financing scheme after the courts ruled the vehicle, which purported to invest in Disney films, was actually a tax avoidance scheme.
The scheme offered investors a deferral of tax in exchange for investing in exploitation rights to Disney blockbusters including Pirates of the Caribbean two and three.
David Greene, a partner at law firm Edwin Coe, is acting for 400 of the investors in the schemes.
He said the £250m damages being claimed from the banks could rise by more than £1bn if tax authorities pursue investors for so-called ‘dry tax’ in relation to the scheme.
HM Revenue and Customs has previously said it will pursue investors for ‘dry tax’ on the revenue from the scheme that was reported to tax authorities, but never actually existed.
“The investors have lost about £250m in total, but if the dry tax is imposed that is an extra £1bn tax on income that not only was never received, but that was never going to be received,” Greene said.
The banks have been sent letters before action relating to the claim, with formal court proceedings expected to start in the next two months.
HSBC and Bank of Ireland were contacted for comment.