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Tax Tribunal rules strongly against film scheme

A tax avoidance scheme marketed by Goldcrest Pictures Limited to some of the wealthiest people in society has failed to live up to its promise.

The Tax Tribunal has ruled that the scheme, which was based on buying and selling film rights, simply didn’t work.

Users not only had to pay the tax owed with no relief at all for the money they put into the scheme, but also ended up out of pocket as a result of paying fees to the company.

A Goldcrest company, based in the British Virgin Islands, sold rights in two feature films for an artificially inflated figure of £21.9 million to Patrick Degorce – a hedge fund manager – who was, in fact, only required to pay £4.8 million of his own money.

He immediately sold the rights back to the same Goldcrest company for a fraction of this price – claiming that the difference was a trading ‘loss’. He aimed to set this ‘loss’ against £18.8 million profits of his hedge fund – so he wouldn’t have to pay any tax on them.

In a comprehensive win for HMRC, the Tribunal ruled strongly against the scheme.

David Gauke, Exchequer Secretary to the Treasury said:
“The Government has made it clear that we will not allow marketed avoidance schemes to deprive the UK of vital tax revenues. We have invested nearly £1 billion to help HMRC take action against the minority of taxpayers who think they are above the law, we are bringing in new anti-avoidance legislation and we are giving HMRC greater powers to clamp down on those who sell dubious avoidance schemes like this one.”

Stuart Coleman, Manager of the Tax Department of ABDS comments:
“The Tribunal’s ruling in this case sends a clear message to anyone tempted to buy into this type of scheme. The promoter of the scheme put in nearly £5 million of his own money, but all he has come away with is an HMRC enquiry and an appearance before a tax tribunal.”

If you are unsure and need any help and advice on Self Assessment, Corporation tax, VAT, PAYE, or you need to keep abreast of changes in legislation and how it could impinge upon your business, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail:

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