Furious investors admit defeat in £5bn tax fight: Celebrities set to settle bills as deadline over discounts looms

Millionaire investors in a £5billion alleged tax avoidance scheme run by financier Patrick McKenna’s investment firm Ingenious are preparing to settle with the taxman rather than face a court battle with the authorities.

The Ingenious scheme, revealed by The Mail on Sunday four years ago, is one of the biggest of its kind and counts a string of celebrities among its members.

Footballers David Beckham, Wayne Rooney and Steven Gerrard, TV presenter Jeremy Paxman, singer Robbie Williams, art dealer Charles Saatchi, Labour peer Lord Hollick and industrialist Sir James Dyson were among 1,300 investors who put £2billion a year into the scheme, based on investing in film production, over the past decade.

Ingenious’s vehicle was the highest profile example of such schemes and McKenna is regarded as the mastermind behind film investment plans, which have been copied by other accountancy firms. The Ingenious scheme has since been labelled a tax dodge by HM Revenue & Customs.

Ingenious and the Revenue will face each other at a tribunal in November. But investors are preparing to take up an offer from the Revenue to pay a discounted proportion of the tax due to settle their affairs.

The climbdown comes after a letter from Ingenious to members warned that they had only a short time to settle if they wanted a discount on their bill.

One furious multimillionaire investor, who spoke on condition of anonymity, said: ‘I am appalled to be honest.

Ingenious have been writing to us for years assuring us they would “win”, that right was on their side, and that HMRC didn’t have a leg to stand on. Well, this letter didn’t say that at all, and in fact looked like a major back-pedalling exercise.’

In May, a scheme in which Take That singer Gary Barlow had invested was deemed to be a tax avoidance scheme, prompting Prime Minister David Cameron to condemn all tax avoidance and use a Take That lyric to say: ‘We want your money back for good.’

Ingenious director John Boyton sent a letter last week to investors warning them that an offer to settle from the Revenue sent last year ‘may not remain open for too much longer’.

It warned that if the case is lost, investors will have ‘to repay the initial tax refund together with interest at the prescribed rates’, without initial losses incurred through the scheme being available to set off against future profits.

Ingenious said: ‘The letter was not intended to reflect a change of position and Ingenious remains confident in the outcome of the tax tribunal.’ It has always stuck to its claim that the schemes were run with a view to making a profit and not set up merely to avoid tax, but HM Revenue disagrees.