By Áine Quinn
Bankers, athletes, and celebrities are suing Ingenious Media Holdings, saying they were misled about investments in the film industry that were later branded tax-avoidance by the UK government.
Dozens of traders and managers from Goldman Sachs, Lloyds Banking Group, HSBC Holdings, Credit Suisse, and other banks are among approximately 500 investors taking part in the London lawsuit, according to court documents released earlier this month. Celebrities, including British composer, Andrew Lloyd-Webber, are also among the claimants.
The UK government has cracked down on the misuse of movie tax breaks in recent years. The UK Treasury expanded tax relief for films in 1997, to boost the British film industry, but loopholes in the system were widely abused. At least seven men were sent to jail, including three former Jefferies Group bankers. Ingenious Media, whose movies include the Life of Pi and Avatar, ran investment plans focused on films that were designed to be tax-efficient, according to court documents.
Investors say, however, that Ingenious Media “made representations of fact, which were false and which they had no reasonable grounds for believing were true”, while promoting the plans. This induced the claimants into joining the plans and losing money, they said. Ingenious denies that the plans were set up as a tax dodge and is in its own legal battle with the UK tax authorities over the issue.
A specialist tax court ruled in August, 2016, that some parts of the investments were eligible for tax relief and others weren’t, with both sides claiming victory. A spokesperson for Ingenious said that they were confident of validating the rest of the investment vehicles, at a hearing next March.
Patrick McKenna, the Ingenious chairman, who is also a defendant in the lawsuit, said, through his spokesperson, that the claims are “entirely without merit and will be vigorously defended”.
The number of claimants is rising, though it is still only a quarter of the people who invested in the plans, said David Pickstone, a lawyer at Stewarts Law, who represents the claimants. They expect to recover £200m (€224m). The UK tax office has said that one of the Ingenious plans tried to use artificial losses in a range of movies and that, in some variations, users claimed more in tax relief than they had invested.