Conservative MP implicated in tax avoidance scheme
A CONSERVATIVE MP invested in an alleged tax avoidance scheme currently under investigation by HM Revenue & Customs.
Conservative Geoffrey Cox QC – a top lawyer at Thomas More Chambers – is one of 230 who put cash into Pheonix Film Partners, run by Ingenious Media, the Mirror reports.
Pheonix had assets of £107m last year, but made a £7.7m loss over five years, since launching in 2008 when Cox joined the scheme. It is not known how much he invested, but there is no suggestion of any illegal activity.
Cox said: “I was introduced to Ingenious, the organisers of Phoenix, approximately six years ago by professional advisers. I was advised that Ingenious was a large and reputable company, which had successfully conducted similar investment partnerships in the past without issue, that the partnership in which investment was invited had been submitted to HMRC and had met with no objection or query, that it was intended to invest in the production of major films, and that it complied with my general instruction that I did not wish to be involved in aggressive tax avoidance.
“I understand that the partnership is to be considered at a tribunal later this year and that Ingenious strongly disputes the assertions made by HMRC.”
Despite that, it is understood that the upcoming tribunal does not concern Pheonix, but instead three completely different Ingenious partnerships.
Members did not have to pay tax on cash invested, but will have to pay it on any future earnings. Last year the average payout to users was £274, up from £94 the year before.
Under HMRC’s new accelerated payment rules, the taxman will be able to make taxpayers pay disputed tax in advance, rather than waiting for the outcome of a tax tribunal ruling. If the taxpayer wins their case, the money is reimbursed with interest.
In all, some 1,200 schemes have been targeted by HMRC for accelerated payment.
Phoenix is one of several vehicles set up by Ingenious that HMRC believes were set up for tax purposes, something it vehemently denies. Ingenious is set for a tribunal hearing with HMRC next year over its other investment schemes.
In a statement, Ingenious Media said: “Phoenix was a bona fide integrated film partnership involved in the production and marketing of films. It traded for just under six months before the capital was returned to partners in April 2009. As the business was dependent upon bank borrowings its trading activity was curtailed by the banking collapse of 2008. The interest payable by individual partners on their loans represented a deduction for tax purposes but it was also taxable income in the hands of the UK company that lent them the money and was not therefore tax avoidance. We have provided all of the information requested by HMRC nearly a year ago and are once again waiting for their response.”