The Ingenious film partnerships have succeeded in their appeal before the Court of Appeal in [2021] EWCA Civ 1180.
However, investors in these tax avoidance schemes must curb any excitement they might initially feel at this success. What was before the Court of Appeal was in monetary terms a relatively insignificant skirmish: the war had already been lost when the Upper Tribunal decided against the partnerships on the key aspects of the planning and leave to appeal on that part of their decision was refused.
Nonetheless, even though the amounts remaining in dispute after striking out those key points of the planning were only some 4% of the losses originally claimed, 4% of £1.6 billion is still a substantial sum. And the lengthy judgement of the Court of Appeal as to whether the partnerships were trading, and if so whether they were doing so with a view to profit, is required reading for practitioners.
In the event, the Court of Appeal held that the Upper Tribunal had been wrong to set aside the decision of the First-tier Tribunal on both these matters: the partnerships were indeed trading and were doing so with a view to profit. That, having regard to the other findings not before the Court of Appeal, meant that the partnerships had the consolation prize of a tiny fraction of the relief originally claimed.
Better than a slap in the face with a wet fish, we suppose: but only just.
Originally Published by Tax Journal, 09 August 2021
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