Ingenious Media has won a legal hearing against HM Revenue & Customs (HMRC) after an appeals court ruled that the company’s film tax scheme businesses were trading with a view to make a profit.
The company has been locked in a long-standing legal battle with the UK taxman over claims that the film scheme it marketed artificially created losses so investors could claim tax relief.
But, on 4 August 2021, the court of appeal upheld two petitions made by Ingenious Media and its subsidiaries about the making of films such as Die Hard 4 and Avatar. The two appeals were made by Ingenious’ limited liability partnerships Inside Track Productions (ITP) and Ingenious Film Partners 2 (IFT2).
The court of appeal said that a 2019 upper tribunal “was wrong to interfere” with the 2017 first-tier tribunal’s decision in regard to ITP and IFT2 “on both the issue of trade and the issue of a view to profit”.
An Ingenious spokesman said: “We are very pleased that the court of appeal reversed the findings of the upper tier tribunal and ruled that our film partnerships were, as we have always contended, trading with a view to profit.
“In light of this judgment, we are considering what further options are open to us in relation to these proceedings.”
An HMRC spokesperson added: “Although HMRC lost this hearing, 96% of the claimed losses had already been disallowed and the court noted that the LLPs were tax avoidance schemes.
“HMRC has won around 90% of tax avoidance cases taken to litigation in the past three years, with many more settled before reaching that stage.”
Over the last few years, many celebrities and sports people have been caught up in the court battles between HMRC and Ingenious, where many stars have been left with large tax bills.