HMRC wins £26m film partnership legal battle

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HM Revenue & Customs has won a tax avoidance case against two film partnership schemes worth £26m of taxpayer money.

The Court of Appeal has dismissed appeals from Proteus Film Partnership and Samarkand Film Partnership, which acquired interests in films such as The Queen and the Roman Polanski remake of Oliver Twist.

The court has upheld a previous judgement that the schemes were not trading and no tax relief was due.

The investments were sold to high-net-worth individuals, many of whom were resident but not domiciled in the UK. The schemes worked by granting investors upfront repayments on tax relief and avoiding tax on income generated.

HMRC says the ruling could impact on other cases worth a total of £286m.

HMRC director general of customer compliance Jennie Granger says: “This scheme deliberately sought to exploit the tax reliefs put in place to help boost the British film industry, but it didn’t pay off.

“We’re delighted with the win which means we’ve protected £26m of taxpayers’ money.”