Lawyers at Stewarts Law will represent 220 investors who claim to had been assured at the time that the partnerships they were investing in were legitimate trading businesses.
The scheme has been branded by HMRC as tax avoidance and left investors and involved celebrities and sporting figures who invested with over £100m in losses.
As a result of the decision and Accelerated Payment Notices being issued recently, investors now face large tax bills for repayment of the majority of the tax relief claimed, along with interest, according to Stewarts Law.
David Pickstone, head of tax litigation at Stewarts Law, said, “Investors were assured that these partnerships were entirely legitimate trading businesses seeking to make profit through financing films and video games.
“They were also assured as relevant that these investments satisfied the rules behind government endorsed tax incentives introduced to boost investment in the British film industry, effectively mitigating the risk to investors’ capital. Our clients, having invested in good faith, now face large losses as a consequence of the decision.
“Whilst investors have been vilified for seeking to avoid tax, the reality is that they invested and lost substantial capital having been assured that any losses would be mitigated by government sponsored tax reliefs designed specifically to encourage investment in potentially risky film projects," added Pickstone.
Last month, HMRC claimed victory over Ingenious Media in the long running tax avoidance dispute. Ingenious argued, however, that the Revenue was trying to divert attention from “the main point” of the ruling. Both sides tried to claim the decision was a "win". Ingenious is considering its options and “actively considering an appeal”.
Ingenious today declined to comment on the lawsuit brought by its investors. UBS also declined to comment.