HMRC has recently won a significant case at Southwark Crown Court against a group of film producers, accountants, financial advisers and investment bankers who received a combined jail sentence of more than 36 years for faking tax rebates and cheating HMRC out of £2.2 million.
The people involved in the scheme claimed false tax rebates linked to contrived investments in film-making partnerships.
The partnerships claimed to have spent £5.7 million and made significant financial losses on two UK film projects, ‘Starsuckers’ and ‘Mercedes the Movie’. These artificial losses enabled the wealthy investors to falsely claim back around £40,000 in tax relief for every £20,000 they had invested.
HMRC identified a series of suspicious tax rebate claims, which investigators discovered had originated from two fraudulent tax avoidance schemes that had been set up and managed by a Monaco-based accountant. He in turn was supported by an independent financial adviser who provided fake documents and promoted the scheme to wealthy individuals keen to evade paying tax. Investment bankers were also involved in circulating money and producing falsely inflated invoices to underpin the scheme.
More than 100 officers from HMRC took part in the operation that led to the arrests in February 2012. Eighteen properties were searched and computers, business records and mobile phones were seized. A number of lengthy trials were held prior to the prison sentences being handed down to those involved. Four other bankers were found not guilty following a retrial in December.
The majority of the tax refunds claimed by investors were withheld and £500,000 which had been paid out initially, has since been recouped by HMRC. Investigations to recover further proceeds of the crime are under way.
The basic message is that if an investment scheme sounds too good to be true it probably is.
