Proteus Film Partnership and Samarkand Film marketed film partnership schemes to wealthy people, many of whom were resident but not domiciled in the UK. The arrangements sought to allow scheme users to get an upfront repayment on the tax reliefs and escape tax on the income generated.
HMRC previously ruled that the partnerships were not trading and were therefore not due any tax relief. This view was upheld in the First-Tier Tribunal and the Upper Tribunal after the partnerships brought judicial review claims on the basis of an alleged breach of a legitimate expectation said to arise from the terms of HMRC’S business income manual.
Proteus and Samarkand have now lost their second appeal against the judgement.
This week, the Court of Appeal dismissed the tax and judicial review appeals and refused the appellants permission to appeal to the Supreme Court.
The court confirmed HMRC’s view that the partnerships were not trading and there were never any losses available to investors to reduce their tax bills.
The Revenue said the ruling protects more than £26m of taxpayers’ money and added that the decision could potentially impact on other cases worth £286m.
Jennie Granger, HMRC director general, customer compliance, said, “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.”