UK Film Tax Relief: Ingenious Media Appeal Against HMRC

In an appeal that could cost HM Revenue and Customs up to £1 billion, Ingenious Media plans to launch an appeal against the tax man over a controversial film industry tax relief scheme. Promising tax relief and a reduced tax bill, celebrities were persuaded by Ingenious Media into a film partnership scheme that have since proven very controversial. Numerous sports stars, celebrities and wealthy individuals have been caught up in the furore surrounding various film industry tax relief scandals. To name a few, David Beckham, Jeremy Paxman and TV favourites Ant and Dec invested money in the schemes devised by ingenious media. With an unquestioned reputation, the stars felt Ingenious Media to be worthwhile investment, since the company has funded more than sixty films including Avatar and Brooklyn.

The appeal from Ingenious Media comes after a tribunal upheld HMRC’s charges against the company, finding that investments from individuals into its tax relief scheme did not warrant tax relief. Described by a former HMRC boss as “scams for scumbags,” the government agency has argued that rather than a genuine and legitimate investment scheme, the whole enterprise was structured for the purposes of tax avoidance. As a result, HMRC is refusing to grant tax relief and demanding payment of outstanding taxes with interest. The case represents one of the biggest financial challenges to HMRC, with investors claiming around £620 million worth of tax relief. Combined with interest, this means that the best part of £1 billion is at stake, if HMRC lose the case.

The Limited Liability Partnerships were launched around ten years ago and were able to acquire millions of pounds in investment. Household names, high-flying City workers, entrepreneurs and business elites were attracted by the tax relief scheme. However, originally marketed as tax efficient, HMRC turned around and issued investors with huge tax bills, arguing that the investments did not warrant tax relief.

One Formula Limited Liability Partnership: All You Need to Know about Tax Exemptions, Tax Relief, Tax Credits and Tax Rebates

Manchester’s One Formula LLP is touting itself as the country’s hottest tax efficiency provider. Consisting of a team of financial experts, which includes a financial advisor, city trader, insurance advisor, ex-Wales international rugby player and a former police officer, the organisation claims to have secured tax savings for super-rich clientele estimated to be in the millions. With a multi-faceted approach, the financial and fiscal experts at One Formula LLP support their clients in securing tax exemptions, tax relief, tax credits and tax rebates. From managing various multi-million pound investment portfolios to supporting smaller clients managing their taxes and dealings with HMRC, the Manchester firm has seen an exponential growth in recent times.

As one of Manchester’s most powerful business conglomerates, One Formula LLP has gradually become a well-recognised and widely-renown company. With its ability to support the super-rich in reducing their tax bills, word has gotten around fast. According to the latest rumours, One Formula LLP are working as the primary financial advisors to a raft of local footballers. Furthermore, not only do they boast some of the country’s richest football players from Manchester City and Manchester United on their books, but it has been mentioned that Manchester City manager Pep Guardiola has enlisted the company’s help.

Beyond the company’s financial and fiscal expertise, executives have also been keen on supporting a variety of causes through recently established charities. The largest charitable project supported by One Formula Limited Liability Partnerships is a dogs and cats home, supported through an animal welfare charity. Alongside the animal shelter, the company has also announced the establishment of a knife crime charity, seeking to support local community and grassroots initiatives working to eradicate knife crime.

Ways HMRC Catches Tax Fraud and Tax Evasion

Connect

Connect is a powerful computer programme which sifts through reams and reams of financial data to literally connect disparate transactions with one another. It its hunt for tax fraud and tax evasion, HMRC is able to detect relationships between apparently unconnected transactions. Deployed since 2010, Connect has helped HMRC recoup millions lost to tax fraud and tax evasion.

Global cooperation

Once upon a time an offshore back account, outside of the HMRC’s jurisdiction, would have been a safe place to stash the proceeds of tax fraud or tax evasion. However, as of September 2017, following a joint global crackdown on tax evasion and tax fraud, a “common reporting standard” has been put in place. According to the new rules, details of expats’ earning will be related to their home governments. Numerous tax investigations from Crown Dependencies, Overseas Territories, the US and Switzerland are already underway.

Ghost workers and moonlighters

HM Revenue and Customs defines those workers whose incomes are unknown to the government body responsible for taxation as ghost workers. Moonlighters are those whose partial income is known to the HMRC, but who do not declare additional income. Through a targeted engagement and increased focus on these two groups of tax fraudsters, the HMRC is constantly in surveillance.

Carrots and sticks

In a bygone era, HMRC would coax people committing tax fraud and tax evasion into confessing. By confessing and settling their accounts with HMRC, tax fraudsters could hope to avoid additional penalties and prosecutions. However, recently, since 2015, HMRC has been coming down hard on those found guilty of tax fraud or tax evasion. More recently, HMRC has resorted to “naming and shaming” individuals it has found guilty of tax avoidance. In a list published on its official website, details of those found guilty of tax fraud are updated every three months.

 

Ghost Brokers under HMRC Investigation Jailed for Tax Fraud and Insurance Fraud

Elina Jaksone, 36, and Gagik Kyriacos Manucharyan, 40, were the subject of a HMRC investigation relating to both tax fraud and insurance fraud. Together, the couple from Kent orchestrated as “ghost insurance brokers,” whereby fraudulent insurance was provided to unwitting customers. Furthermore, the pair of fraudsters failed to declare the earnings from their insurance fraud enterprise to HMRC and were thereby guilty of tax avoidance. The two fraudsters’ vehicle insurance fraud involved supplying insurance providers with false details, in order to reduce the cost of insurance premiums, for customers who remained unaware. While enabling customers to purchase insurance cover at reduced prices, most were actually left without cover as their fraudulently acquired policies were potentially null and void.

For each policy they secured, the fraudsters netted £100. Ultimately, from the insurance fraud scheme the pair earned a whopping total of almost £1 million. However, apart from the vehicle insurance fraud, the pair failed to declare their earnings to HMRC. This meant that a tax bill on the £920,000 that they earned remained outstanding. As if this wasn’t enough, Jaksone also fraudulently claimed £82,000 in tax credits and pension credits. Her tax credit scam relied on her pretending to be a single mother with high childcare costs. Furthermore, using her mother’s details, the crooked fraudster also committed pension credit fraud and fraudulently claimed winter fuel allowance payments. On top of this, in an attempt scuppered by HMRC, the serial fraudster also sought to claim pension credits in her father-in-law’s name.

Assistant director of HM Revenue and Customs, David Margree declared, “Jaksone and Manucharyan cheated honest, law abiding people, spending their ill-gotten gains on a lifestyle that many of us can only dream of. They also cheated their customers by providing them with inadequate insurance policies. HMRC will not tolerate fraud. We work closely with other agencies, including the Serious Organised Crime Agency, the Department for Work and Pensions (DWP) and the financial sector to tackle all forms of fiscal fraud and protect the interests of the public.”

HM Revenue and Customs New Home in Greater Manchester

Her Majesty’s Revenue and Customs will be moving into Greater Manchester, at one of thirteen modern regional centres to be located across the UK. Located in Salford, the seven-storey block, 3 New Bailey, will become HM Revenue and Customs’ state-of-the-art regional centre. HMRC’s newest office in the North West will begin to be staffed from Spring 2022. 2,000 from various other locations will move into the new premises. In 2027/2028, the new phase of the regional centre will be set to open and welcome another 2,500 staff. Currently, these members of HMRC’s staff are based in Trinity House in Dearman’s Place, Salford. Additionally, across the North West region, there are currently 24 offices where HMRC staff are based. Ranging in size, hosting between almost a few thousand and just more than a dozen staff, these disparately sized offices are a relic of the 1960s and 1970s.

This expansion of staff is welcomed by local businesses, located around Chapel Street and New Bailey districts, right atop Salford’s border with Manchester city centre. The state-of-the-art facilities and expanded office area will allow HMRC to provide staff with modern technological infrastructure and improved training facilities. It is expected that the upgraded facilities and integrated working area will help HMRC support more skilled jobs and improved career progression paths, eliminating the need for staff to move across the country. Chief executive of HM Revenue and Customs, Jon Thompson, said, “HMRC’s presence in Salford, Manchester and the wider North West is longstanding and well-established. The new regional centre is a clear demonstration of our commitment to the area and its economy. New Bailey will deliver the flexible and collaborative working environment that our staff need and the centre will be a hub of highly-skilled career opportunities.” The new facility will also secure the jobs of thousands in the region.