Tuesday 26 September 2017

Film scheme backed by Keane will be probed by UK taxman

MOVIE INVESTOR: Keane may have to pay a hefty tax bill
MOVIE INVESTOR: Keane may have to pay a hefty tax bill
Nick Webb

Nick Webb

Ingenious Media, the UK investment group which has included Ireland football stars Robbie Keane and John O'Shea among its investors, has written to 1,300 of its current and former clients warning them they may be facing tax demands of up to €650m related to investments in blockbuster Hollywood movies ranging from Avatar, X-Men First Class and Rise of The Planet of the Apes.

The investors are caught up in a €10bn UK Revenue crackdown that will push taxpayers to make immediate payments of disputed tax bills relating to investments in under-fire tax schemes over the last 10 years. Ingenious has informed its clients that they may be asked to repay all the tax they saved under these schemes. They may also be asked to pay interest on these sums.

Sources have indicated that tax bills - possibly running into the millions - will be issued shortly. Ingenious has written to its investors warning them that a settlement offer, thought to reduce bills by 40pc, may not be open for long.

High-rolling clients of Ingenious, which included footballers, pop singers, comedians and leaders of industry became directors of partnerships that racked up losses of more than €1.5bn, as the costs of films they had invested in were written down.

The clients help provide co-production financing for big-budget movies. These clients could then offset their losses against other earnings, which helped to reduce their tax bills. However, the British tax authorities moved to block this practice in 2007 as the cost of film tax relief soared to almost €850m.

Over the last decade Ingenious Media has been a key financier of Hollywood movies including Die Hard 4.0, The Life of Pi and Wolverine. It was accused of using film tax breaks "on the whole to see how you could help your clients avoid tax" by British MP Margaret Hodge in 2012.

Ingenious has repeatedly denied that its partnerships are tax-avoidance schemes, stressing that they are bona fide businesses that have already generated close to €1.3bn of taxable income. It is set to argue its case before a tax tribunal in November. Ingenious did not comment last week.

Keane was listed as a member of the Inside Track 1 llp, alongside Ireland's John O'Shea, Liverpool's Steven Gerrard and ex-footballers Emile Heskey and Gary Lineker. He was also an investor of Inside Track 2 llp and Phoenix Film Partners llp, which are financial partnerships put together by Ingenious Investments, according to filings.

The Republic of Ireland striker - who moved to the MLS team LA Galaxy three years ago - was also a member of three other Ingenious Film partnerships. He stepped down as a member in 2011.

Keane's fellow investors in the Ingenious partnerships included David Beckham, Manchester United assistant boss Ryan Giggs, former teammates Wes Brown and Nicky Butt, as well as Borat star Sacha Baron Cohen, comedian David Baddiel, musician Gareth Gates and cricketer Marcus Trescothwick.

Representatives of Keane and O'Shea did not comment last week.

Sunday Indo Business

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