Film franchises often go that one episode too many as the studios seek to extract value from their considerable investment. Did we really need a third Matrix film, a second Hangover?
In cases where HMRC has been investigating the way in which investors accessed statutory film tax relief, the sequels have been running for years and years. Even when the Court of Appeal “wrapped” the Eclipse partnership, it managed to continue.
It now appears however that the final script has been written. After a long period of incubation, HMRC has produced its terms for settling the Eclipse position for investors. Laying aside a number of concerns over compliance with HMRC’s Litigation and Settlements Strategy (LSS), in our view, investors should see these as bringing this franchise to an end.
Unfortunately, rather like the CoA decision years ago, the terms are not a detailed script of how to play out the final scenes but are rather more like guidelines around which the actors can improvise.
Almost all investors would have had demands from HMRC in various forms since the arrangement was first produced. Some may have fully or partially left the partnership. Some have had APNs, perhaps penalties on those APNs. Some may have participated in legal action to challenge the APN. Some may have acquired a Certificate of Tax Deposit (CTD) some time ago as a prudent protection. It’s possible for repayments of tax in later years has been withheld pending settlement of the Eclipse (or some other) position.
HMRC’s system of holding and applying credits against tax due is not the easiest to navigate. Whilst the headline is that money paid is set off against the earliest liability, because APNs and CTDs do not appear in the regular HMRC account, it is not always certain that this happens, leading to interest charges being incorrectly calculated. Where the original credit arising from the scheme (HMRC was at that time repaying first and checking later (!)) was not paid away, the situation can become much more complicated.
Many Eclipse investors will have some involvement in other film and related arrangements from around the same time. The terms now offered do not cover those schemes but this would be an opportunity to reach some form of agreement with HMRC on the entire “package”. This is often referred to as a “multiple exit” by HMRC. WTT has considerable experience in such exercises. HMRC will not discount the amount of tax they believe is due but there may be an opportunity to contest that amount following recent cases in the Tribunals.
The set is very much going dark on this franchise now and whilst it is possible to mount to further challenges to the HMRC approach, WTT believes that investors should take advantage of it and seek a close to this long running saga.
In line with our policy on fees we will offer a fixed price of £5,000 (plus VAT) for assisting with the settlement. If a multiple exit is required, we are similarly happy to discuss a fixed fee.
If you would like help in bringing your Eclipse position to a close, please contact us at firstname.lastname@example.org.