£1billion ‘film tax bill for stars’: String of household names face paying huge sums over scheme that linked box office hits to tax breaks
- Bob Geldof, Anne Robinson and Victoria Beckham said to be also among the 1,000 household names affected
- They each paid a minimum £100,000 to invest in a movie venture that promised to combine box office hits with tempting tax breaks
A string of celebrities from David Beckham to Andrew Lloyd Webber face having to pay the taxman a total of £1 billion in a dispute over a suspected tax avoidance scheme.
They each paid a minimum £100,000 to invest in a movie venture that promised to combine box office hits with tempting tax breaks.
Gary Lineker, Bob Geldof, Anne Robinson and Victoria Beckham are also among the 1,000 household names affected.
The Ingenious Film Partners 2 LLP scheme qualified for tax breaks under rules designed to stimulate the British film industry. Hit movies such as Life of Pi, Avatar and Girl With a Pearl Earring all benefited from tax relief.
But HMRC now argues such schemes were not legitimate investment opportunities but a means of avoiding tax.
Now a confidential letter, seen by the Sunday Times, has been sent by Ingenious Media Investments to its celebrity investors warning them of ‘draconian’ plans by HM Revenue and Customs to make them pay up to £1billion they had received in tax relief.
The newspaper claimed the tough new approach reflected HMRC’s frustration at dealing with a backlog of some 65,000 individuals and businesses it suspects of using tax avoidance schemes.
The Ingenious film scheme is soon to be tested at a tax tribunal, but HMRC is asking investors to repay money even before their case comes to court.
The letter from John Boyton at Ingenious Media Investments tells clients: ‘This proposal would accelerate the payment of the tax repaid to you by HMRC, in advance of the outcome of the current legislation.’
Other household names who invested in the firm’s ventures include the singers Geri Halliwell and Annie Lennox, television presenters Ant and Dec and Davina McCall, and England football manager Roy Hodgson, along with football stars Wayne Rooney and Steven Gerrard.
Ingenious denies HMRC’s claims and intends to fight for its scheme in the tax tribunal scheduled for November.
Lord Lloyd-Webber told the Sunday Times he was advised that he was being ‘almost philanthropic by investing in the British film industry, and that this was a scheme to promote British films’, adding: ‘At no time did I consider it solely a tax scheme.’
A spokesman for the Beckhams said: ‘They have always paid the taxes they have owed in full.’
Last night Ingenious said the HMRC’s demands were ‘indiscriminate and unfair’. A company spokesman said: ‘Ingenious has been trying to obtain a definitive ruling on the tax status of its film and games partnerships for many years. The company requested a hearing before the tax tribunal in 2011 to resolve this matter as expeditiously as possible, but HMRC has repeatedly used stalling tactics to delay a hearing.
‘Ingenious is proud of its record in financing hit films, including Avatar, Life of Pi and The Best Exotic Marigold Hotel, which have generated more than £1 billion of taxable revenue for the UK Treasury, with a further £1 billion of taxable revenue expected over the life of the films.’
Credit: Daily Mail