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Celebrity investors lose legal bid to overturn £700 million tax bill

Scores of celebrities have lost a legal bid to overturn a £700 million tax bill, it has been announced this week.

David Beckham, Wayne Rooney, and Gary Lineker were just some of the stars behind a film financing scheme designed to deliberately avoid tax, HM Revenue & Customs (HMRC) had alleged.

The financing firm behind the scheme, Ingenious, said it would appeal against the ruling.

More than 1,000 people invested into the scheme, which were promised generous tax reliefs by investing into Hollywood blockbusters such as Life of Pi and Avatar.

Each invested at least the minimum £100,000 to join the scheme.

The capital was then recorded as an “artificial” loss, which could be offset against other earnings to reduce tax liabilities.

However, HMRC claimed that they were not real investment opportunities and was actually a means of avoiding tax.

It said the artificial losses did not count as “allowable deductions”.

HMRC claims that £420 million of tax was avoided, but with interest included the total amount owed will be nearer to £700 million.

Tribunal Judge Charles Hellier agreed that none of the tax deductions were allowable.

“We have not found this an easy decision, and are comforted by the fact that others have had similar difficulties with the concept of capital,” he added.

HMRC said: “We are pleased that the tribunal has agreed with us that the vast majority of what was claimed in tax relief by Ingenious investors was simply not due.”

A spokesperson for Ingenious said: “We strongly disagree with the tribunal’s clarification of a technical matter from its summer 2016 ruling. It is wholly unsatisfactory that the tribunal reached this decision with ‘misgivings and reluctance’. We will be appealing the entire decision of the tribunal.”

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ELS Legal is an international law firm based in London with more than 50 partner offices across the world. As part of the Cathay Associates global legal network, we are the first choice law firm for a number of British businesses and overseas clients.

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