Goldcrest have been responsible for a string of critically and commercially successful films including Gandhi, The Killing Fields, Chariots of Fire and A Room with a View.
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 HM Revenue and Customs (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.
The Tribunal’s ruling in this case sends a clear message to anyone tempted to buy into this type of scheme.”
Jim Harra, HMRC Director-General, Business Tax said:
“This is another film scheme which has delivered none of the tax benefits promised by the promoter.
“Mr Degorce put in nearly £5 million of his own money, including £1.6 million which went into the promoter's pocket, but all he has come away with is an HMRC enquiry and an appearance before a tax tribunal.
“Sadly, many people have been tempted by similar schemes which we also believe don’t work, and we have opened a settlement opportunity to get them back on the straight and narrow. I would urge anyone in this position to sign up for this facility quickly.”
Notes for Editor
1. This is the third in a ‘hat-trick’ of important successes at Tribunal in HMRC’s drive against tax avoidance.
The others were:
- the abuse for tax avoidance purposes of reliefs put in place to support medical research. The details of the case can be found here
- the Chappell case, which if successful, could have made paying income tax voluntary. The details of the case can be found here
2. Patrick Degorce claimed losses in the first year of the scheme in 2006/07 of £18.8 million, putting tax at risk of £7.5 million.
3. Eleven other individuals used the Goldcrest scheme in its first year (they are also bound by the Tribunal decision) with total combined losses of £47.6 million risking £17.7 million of tax.
4. In the last few weeks HMRC has sent thousands of letters to people involved in such so-called sideways loss relief schemes, to make them aware of the importance of settling their tax liabilities by agreement, without the need for litigation. More details are available at: http://www.hmrc.gov.uk/press/settle-opp-tax-avoid.htm
5. Established in 1977, Goldcrest has financed, produced and/or distributed a large number of commercially and artistically successful films and television programmes including : Chariots of Fire, Gandhi, The Killing Fields and A Room with a View.
6. Follow HMRC on Twitter @HMRCgovuk
7. HMRC’s Flickr account www.flickr.com/hmrcgovuk
Issued by HM Revenue & Customs Press Office
Press enquiries only please contact: