Ingenious confirms its intention to appeal to the Upper Tribunal after Judge concludes First Tier proceedings with “misgivings and reluctance”

  • Confirms timetable for appeal process
  • Clarifies the meaning of a recent “supplementary decision” following misleading media reports

LONDON--()--Ingenious, the leading independent investor in the creative industries and backer of hit movies including Avatar and Life of Pi, is to appeal against the judgment of the First-tier Tax Tribunal in its long-running dispute with HMRC over the tax status of its historic film production partnerships which date back as far as 2002.

“The Tribunal’s clarification of a technical matter has been presented in the media in a wholly-biased manner which misrepresents the facts and misleads the reader.”

This follows a recent supplementary decision handed down by Judge Charles Hellier in which he clarified a technical point from his original August 2016 judgment. In this clarification, the judge ruled “with misgivings and reluctance” that the film production costs were capital costs and therefore not tax deductible.

Some media outlets have reported this as a failed attempt by Ingenious to overturn the August 2016 Tribunal decision. In fact, this latest development was triggered after the Tribunal, having found in favour of the Ingenious partnerships on its basis of assessment, instructed the parties to agree a common approach in applying the judgement.

Ingenious believes this further decision compounds the errors made by the First-tier Tax Tribunal and reinforces the need to take this matter to a higher court. The appeal to the Upper Tribunal is likely to be heard during 2018 and Ingenious are confident of victory.

Ingenious CEO Neil Forster said:

“The Tribunal’s clarification of a technical matter has been presented in the media in a wholly-biased manner which misrepresents the facts and misleads the reader.

We strongly disagree with the Tribunal's clarification and find it wholly unsatisfactory that the Tribunal reached this decision with "misgivings and reluctance". We will be appealing the entire decision of the Tribunal.

This follows a recent successful appeal brought by Ingenious against HMRC which led to the judges of the Supreme Court unanimously ruling in favour of Ingenious that HMRC had acted unlawfully in a briefing to the press.”

Background Information:

  1. Ingenious is going to appeal the First Tier Tax Tribunal judgement as they consider it is fundamentally flawed. However, no appeal has yet been made and to report otherwise is factually wrong.
  2. This clarification from the First Tier Tax Tribunal does not change the original ruling, it clarifies how it is to be implemented. In August 2016, the First Tier Tribunal found that on its basis of calculating profit the film production partnerships were trading with a view to profit. In non-tax speak, this means that they were bona fide commercial businesses and not, as certain press articles have repeatedly suggested, "tax avoidance schemes". This is wholly unsurprising to Ingenious given that a number of the partnerships’ films are profitable, the partnerships have generated in excess of £1 billion of taxable income and they have supported the production of some of the biggest films of all time, such as Avatar and Life of Pi.
  3. Press reports continue to characterise the Ingenious partnerships as tax avoidance vehicles. This ignores the fact that the judge has ruled they are trading businesses and are fundamentally different to all other film arrangements that have been before the courts. To our knowledge, the August 2016 ruling in respect of the Ingenious film partnerships is the first time in recent memory that a tax tribunal has ruled in favour of a “film scheme”.
  4. Press articles continue to quote comments made by the former Permanent Secretary of HMRC, Dave Hartnett, when he referred to “scams for scumbags”. It should be noted that the Supreme Court unanimously found against Hartnett and HMRC in October 2016 after they acted unlawfully in an “off the record” briefing to the press.


Theo Crutcher, 07792696667