Footballers Caught Offside By Tax Relief Film Schemes

Robbie Lawther

27 February 2018

English footballer Wayne Rooney has been hit with a £5 million ($7 million) tax bill after UK collectors overturned his use of a film scheme designed to mitigate tax bills. A number of UK celebrities are also affected, according to the Sun. The saga underscores how high-profile individuals have been embroiled in such controversies over recent years.

Investors were able to claim their outlay as a tax break over 15 years in return for helping fund movies, but UK tax collector and Invicta 43.

The news report said a letter was sent this month to investors in Ingenious Film Partners and Ingenious 2 that told them they could owe £12,000 and £16,000 per £100,000 put into the schemes. Each star had to invest at least £100,000.

HMRC argued the schemes were an unacceptable form of avoidance and, in August 2016, won a ruling to claw back two-thirds of the tax relief claimed.

A tax tribunal last year upheld the 2016 decision that the incentives were not allowable deductions, leaving HMRC to chase £700million. Ingenious is appealing the ruling with a hearing set for early 2019.
In documents reportedly seen by the Sun on Sunday, all investors in Ingenious Film Partners and Ingenious Film Partners 2 have been warned to expect “a substantial increase in the tax payable”.

At the heart of the issue is HMRC's definition of what is unacceptable tax avoidance. Typically, it is understood that authorities frown on schemes where there is no underlying economic or public policy rationale for a tax-deductible process - as with Individual Savings Accounts, Self Invested Pension Plans and other structures - and where the sole purpose appears to be avoiding tax. The distinction between tax avoidance, which is typically not illegal, and tax evasion, which is, is being blurred.

Future Screen Partners
The news report also said former footballers Steve McManaman, Kevin Phillips and Ian Walker have been told they could face “catastrophic” bills after investing in a separate scheme called Future Screen Partners No1.

Rooney is not among the 241 famous names said to be involved in that scheme, however.

The project’s promoter, Future Capital Partners, wrote to all investors warning them the company may go bust.

The letter said: “The liquidation will automatically mean all remaining members of the partnership will become designated members with obligations to prepare accounts, tax returns, annual returns and to deal with HMRC enquiries. A failure to do these things will lead to individual penalties of increasing magnitude. Clearly the outcomes could be very serious, and possibly catastrophic, for you.”