More than 100 investors, including Investec’s Christian Hess and former Lazard International banker Ken Costa, are pursuing legal proceedings in the High Court against Ingenious Media and around 50 other companies.
In March last year, HM Revenue & Customs argued that the scheme – which was launched by the last Labour Government to help fund film projects – was primarily being used as a vehicle to avoid paying tax. The Revenue subsequently told those invested in the initiative to pay back any tax relief they received.
Various famous names have been linked to the film scheme, including David Beckham, Andrew Lloyd Webber and Bob Geldof.
Ingenious founder Patrick McKenna, a former Deloitte partner, is currently involved in an ongoing tax tribunal against HMRC.
"You won't find anybody here at all who thinks film schemes are anything other than scams for scumbags"
The tribunal was delayed after new evidence was introduced by HMRC in February, however, a verdict is expected next year.
HMRC estimates that the film schemes – which demanded a minimum investment of £100,000 – have caused a £5bn loss in tax revenue.
Last year, Ingenious’s John Boyton sent a letter to clients saying HMRC had ‘draconian’ plans to force them to pay the tax they owed before the case goes to court.
In March this year, the Court dismissed an appeal made by McKenna, who argued that HMRC had acted unlawfully after the body’s former permanent secretary for tax, Dave Harnett, disclosed confidential information about his personal tax affairs to journalists.
“Scams for scumbags”
According to court documents, Harnett made “off the record” allegations about McKenna’s involvement in film schemes, which were subsequently published in The Times in June 2012.
During the meeting with the two journalists, Hartnett said: “I think we’ll clean up on film schemes over the next few years. You may end up laughing at that statement because maybe we’ll lose it in the courts.
“Litigation’s a hell of a risk, but you won’t find anybody here at all, even the most pro-wealthy people, […] who thinks film schemes are anything other than scams for scumbags.”
The Court of Appeal upheld the judge’s decision which said: “The efficient and effective collection of tax which is due is a matter of obvious public interest and concern.
“Coverage in the press about such matters is vital as a way of informing public debate about them, which is strongly in the public interest in a well-functioning democracy.”