HMRC given two-week ultimatum to decide if film scheme broke tax avoidance rules
A judge has given HM Revenue & Customs two weeks to decide whether to put allegations of dishonesty to directors of media firm Ingenious in a court case to decide if its film investment schemes broke tax avoidance rules.
Ingenious, founded by accountant Patrick McKenna, and HMRC are facing each other in a key tribunal case which will determine whether Ingenious’s film finance schemes, in which dozens of top business figures and celebrities put billions of pounds, were an illegal tax dodge or a legitimate investment scheme.
The question of whether the schemes were marketed dishonestly could be crucial since it could lay Ingenious open to legal action from its investors.
Mr Justice Henderson has said HMRC must give Ingenious details of any allegations of dishonesty it might make within two weeks. He noted that there had been ‘a recurrent theme of assurances’ given to the court by HMRC that it was not alleging fraud or dishonesty by Ingenious, though he said HMRC had given ‘the impression’ of ‘ambivalence, even at times evasiveness’ on this issue.
But he also noted ‘the balance of fairness and justice’ came down in favour of permitting HMRC to decide if it wished to put allegations of dishonesty or discreditable conduct to Ingenious. Ingenious said it welcomed the ruling: ‘On a number of occasions during the hearing HMRC was asked whether it was alleging dishonesty in connection with any aspect of the proceedings.
‘It repeatedly confirmed it was making no such accusations. However, on receipt of its closing submissions, it became apparent that HMRC was being ambiguous about its position on this point.
‘We asked the tribunal for permission to refute any new implied accusations and to provide appropriate evidence in support of our position. HMRC opposed this application, so we appealed to the Upper Tier Tax Tribunal, which has given us the clarity and permission we were seeking.’
