Future Capital Partners says it will “stand absolutely behind the investments”; Ingenious battles allegations by saying that a “rogue inspector” made a “misinformed statement.”

Some UK industry sources have given a sceptical response to the front page story in today’s Times newspaper, alleging that wealthy investors in film have been abusing tax breaks aimed at the UK’s creative industries.

Nevertheless, some are warning that such a prominent story in a national newspaper could affect investor confidence in the film industry. 

The Times (of London) story — written by Alexi Mostrous, Fay Schlesinger and Roland Watson — quotes HM Revenue & Customs as saying that “film schemes are a £5 billion risk for us at least.”

As one source told Screen, if the Revenue really is losing £5 billion in unpaid tax as claimed, that would mean at least £10 billion is going into film - a figure dismissed as “nonsense.”

The Times article (link here) focused in particular on investment schemes set up by Patrick McKenna [pictured] at Ingenious Media and Tim Levy at Future Capital Partners. 

Levy’s Terra Nova partnership, The Times reported, gave investors the chance to avoid deferred tax by transferring liabilities offshore.

Future Capital Partners has now issued a statement (in full below) that says it stands behind its investments from 1997 to 2007. “We stand absolutely behind the investments we arranged during that period,” the company said.

However, Ingenious issued a statement today insisting that its dealings with the Revenue are transparent and railing against breaches of confidentiality at HMRC while accusing a “rogue inspector” of making a “misinformed statement.”

“Ingenious has never been in the business of tax avoidance. All of our activities are bone fide commercial ventures, as evidenced by the film profits we have generated for investors and the tax they have paid and will pay on all film revenues arising,” the statement read (full text below).“Our film production partnerships have been responsible for many well known and profitable films which have generated UK taxable receipts significantly greater than the initial tax relief given.” Ingenious also claimed that the company had “received advance tacit approval for our film production partnerships directly from the most senior officials within the Film Policy Unit of HMRC. If they didn’t like them or thought they constituted avoidance in any way why did they give us the green light?”

Details of prominent public figures (including footballers and broadcasters) who’ve invested in tax efficient film finance schemes like Ingenious Film Partners and Inside Track can be found on website whorunsit.org. However, many of these schemes are several years old.

“A lot of the partnerships were using legislation which was introduced to incentivize people to invest in film. The Government at the time saw them as a good thing,” commented Christine Corner, a partner in the media and entertainment group at accountancy firm Grant Thornton. 

The Times investigation into the film industry comes as the UK Government has intensified its campaigning against tax avoidance. Today, comedian Jimmy Carr took to Twitter to apologise for his tax affairs after Prime Minister David Cameron called his involvement in a tax avoidance scheme “morally wrong.”

It’s almost a decade now since the UK Government clampdown on tax driven investment in film during the height of the “sale and leaseback era.” Since then, the UK film tax credit has been put in place.

Stay tuned to Screen for the response from Future Film.

Future Capital Partners statement in full


Between 1997 and 2007 the Government put in place tax laws and policies that encouraged investment in film via very generous tax deferrals. FCP was one of the leaders in this sector, created and encouraged by the Government at the time.

We stand absolutely behind the investments we arranged during that period. Those investments created employment, films, taxes – all the benefits that the legislation was designed to achieve.

We now have a situation where because of the current economic environment HMRC and latterly the Government are challenging what are both legally structured and commercial investments.

Recent coverage have been very clear about the differentiation between ‘synthetic investments’ and those with proper asset backed potential returns. We maintain that, in all circumstances the investments that have
been facilitated by FCP are commercially driven, where there is considerable risk to capital, but significant benefit if the project is successful.

Since 2007 many things have happened and legislation has restricted the ability for individuals to invest in film partnerships.

It is well known that we have diversified our offerings and we continue to offer asset backed investments with potential for profit and risk in diverse industries. As an example, we are now in the process of raising
over £200 million to create over 1000 temporary construction jobs and 150 permanent jobs in Grimsby. On completion, the project is forecast to generate over £1 billion of revenue for this country and the associated
taxes that go with this.”

The Ingenious statement in full

Ingenious has never been in the business of tax avoidance. All of our activities are bone fide commercial ventures, as evidenced by the film profits we have generated for investors and the tax they have paid and will pay on all film revenues arising. 
Our film production partnerships have been responsible for many well known and profitable films which have generated UK taxable receipts significantly greater than the initial tax relief given. The films we have produced are self evidently commercial films eg Avatar to name but one of many. 

Furthermore, we received advance tacit approval for our film production partnerships directly from the most senior officials within the Film Policy Unit of HMRC. If they didn’t like them or thought they constituted avoidance in any way why did they give us the green light? 

To clarify, our investors pay UK tax on their share of the worldwide income from the films, a fair number of which are already profitable. Even those films that don’t fully recoup their costs give rise to a tax charge on the income they generate.

In short, Ingenious film partnerships cannot be compared to or described in the manner in which they have been as similar to those operated by other firms and which are designed to avoid tax. 

Furthermore, our film sale and leaseback partnerships were set up in accordance with specific legislation introduced by the Government in 1997 to encourage investment in British films and fully accord with HMRC’s guidelines, as acknowledged by them. 

Our dealings with HMRC have been in the ordinary course of business and fully transparent. We have received various assurances from HMRC over a long period of time that our film partnerships have complied with proper accounting and trading rules, which is why we were surprised not to have received their full agreement and why we have now asked for the matter to be brought to a conclusion by an independent tribunal. 

We believe that any view expressed by an individual within HMRC about a taxpayer’s affairs, if such a statement was actually said given the breach of their own rules that it represents,  is a very serious breach of confidentiality and we have therefore instructed our lawyers to take appropriate action. We will also be taking this matter up directly with the most senior officials within HMRC as a matter of urgency.  It has to be questioned, therefore, as to how bona fide such a comment really is. We believe it has come from a rogue Inspector who has no authority to make such a misinformed statement. Our day to day dealings with HMRC continue as before and we work towards what we believe more than ever will be a successful outcome at the Tribunal.

In summary, we cannot be involved in tax avoidance at the same time as we are engaged in profit making activities which generate more tax payable than relief given. 

Sale and leaseback is an official government inspired deferral of tax (not avoidance) and our production partnerships have generated profit making films on which full UK tax has been paid. We have attempted to work with HMRC for 7 years to resolve any concerns they may have and as they have been unable to articulate what their concerns are we have asked for the matter to be resolved by an independent tribunal. Our film investments are fundamentally different to those “schemes” and “arrangements” whose primary aim is to avoid tax.

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