HMRC win a film scheme case
A well-known film tax planning scheme whose participants included many public personalities (think Sir Alex Ferguson) was recently confirmed as a tax avoidance scheme. The Court of Appeal ruled in HMRC’s favour that the scheme, in reality, amounted to tax avoidance.
The planning, which sought to create substantial interest relief claims, saw investors borrowing significant sums of money and claiming against their other income, on the grounds that the loan was made to a trading partnership. However, it was held that, in reality, the borrowed money simply earned interest, which was then filtered through to investors to cover the interest on their loans.
The Court of Appeal held that the partnership was not trading and as a result investors are not eligible for interest relief; however the profits from the partnerships remain taxable.
Date: 16th March, 2015
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