HM Revenue & Customs has written to film finance schemes offering a deal to settle long-running tax disputes which could raise hundreds of millions of pounds.
The Financial Times reports HMRC’s counter-avoidance unit wrote to film partnerships last month following a Tribunal ruling last year against film partnership schemes Proteus 1 and Samarkand 3.
The letter encourages film partnerships to avoid further investigation and the cost of going to court. HMRC has secured several court victories against the schemes over the last five years.
UHY Hacker Young personal tax partner Michael Avient told the newspaper HMRC stands to gain “tens if not hundreds of millions of pounds” if schemes accept the settlement offer.
He says: “I think the Revenue is being incredibly pragmatic. The settlement will not be at a level that people won’t accept . . . For the vast majority of partnerships, it will simply not be worth contesting.”
Investors may have a say in their partnership’s decision on whether or not to agree to the settlement, based on their specific terms. Often film finance promoters can take decisions on investor’ behalf.
HMRC’s letter states investors should “take the opportunity that is currently being offered”, not only because future conditions may be stricter but also to give them “certainty over [their] tax affairs”.
Ingenious Media, which has promoted at least one of the film partnerships approached by HMRC, told the FT: “HMRC has persistently failed to distinguish between commercial businesses and tax avoidance schemes, and without proper differentiation has deemed all film partnerships to be tax schemes.”