Patrick Degorce, chief investment officer at Theleme Partners, used a scheme marketed by film finance company Goldcrest Pictures, which involved buying and selling movie rights via a British Virgin Islands entity. Goldcrest has been associated with major films such as Chariots of Fire and Gandhi.
However, a tribunal has ruled that he could not cut his taxable income in this way, leaving him liable for £7.5m of tax.
HMRC claimed that Mr Degorce purchased the rights to two films for an artificially-inflated £21.9m but only used £4.8m of his own money. He then sold the rights back to Goldcrest for a fraction of the total price, stating that the difference was a trading loss. The “loss” was set against Theleme Partners’ £18.8m profit.
Jim Harra, the director-general of business tax at HMRC, said: “Mr Degorce put in nearly £5m of his own money … but all he has come away with is an HMRC enquiry and an appearance before a tax tribunal.”
A spokesman for Mr Degorce said he believes that the decision is “riddled with errors” and plans to appeal. She added that his film investments are in full compliance with UK tax rules.
David Gauke, exchequer secretary to the Treasury, said the case “sends a clear message to anyone tempted to buy into this type of scheme”.