This sort of film scheme was set up just to attract tax relief, the tribunal found – it didn’t actually do anything
HMRC has a won a significant battle after a tax tribunal ruled that the Eclipse 35 film-investment scheme was ‘aggressive tax avoidance’, not a legitimate business. This portends bad news for HNW investors.
This sort of film scheme was set up just to facilitate a financial transaction which attracted tax relief, the tribunal found – it didn’t actually do anything in licensing film rights from and then to Disney.
What this means for HNWs is that the courts, taking their cue from the government, are now enforcing the spirit of tax law, not just the letter, which is easily circumscribed. The cleverer and more artificial the scheme, the less likely it is to be upheld. (Don’t forget, David Cameron has said he won’t have tax avoiders around his kitchen table, which must make informal Cabinet meetings difficult…)
Related
Perhaps some of Spear’s readers will be on the phone to their lawyers and accountants as we speak, having seen the 300 investors in Eclipse 35 lose the desirable prospect of huge tax reliefs. Could this happen to them?
If they had any sense, London’s top tax and trust lawyers would have avoided putting their clients into these sort of schemes because they will have anticipated that they are unusually fragile. The government has been issuing repeated warnings that the lawyers ought to have picked up on too.
So if you’re a HNW and you’ve found yourself in one of these flimsy ‘aggressive tax avoidance’ schemes, perhaps it’s time to ask your lawyer what they were doing.
Content from our partners
