THE COURT OF APPEAL has granted investors in Ingenious Media film partnership schemes the right to appeal a High Court decision dismissing their judicial review challenge against HM Revenue & Custons issuing them with partner payment notices (PPNs).
The claimants’ challenge against both PPNs and acclerated payments notices was dismissed in July of this year by the High Court. Investors led by Nigel Rowe and Alec David Worrall claimed that the notices were unreasonable, breached “natural justice” and represented an abuse of their rights under the European Convention on Human Rights to a fair trial and protection of property.
Under the accelerated payment rules, HMRC is able to make taxpayers pay disputed tax in advance, rather than waiting for the outcome of a tax tribunal ruling. If the taxpayer wins their case, the money is reimbursed with interest. PPNs are similar to APNs but are used where a notice is given to a member of a partnership or an LLP.
In the original appeal, lawyers for Ingenious’ investors also claimed the notices removed the legitimate expectation they had when they joined the schemes that they wouldn’t have to pay tax before the dispute had been resolved. The High Court found in HMRC’s favour on all the challenges.
Law firm Pinsent Masons is acting on the latest appeal and said around 80 claimants will be involved. The hearing is expected to take place towards the end of 2016.
Ingenious Media partnerships have been at the centre of much tax avoidance-related controversy, despite involvement investing in several blockbuster films including Avatar (pictured), Life of Pi, The Best Exotic Marigold Hotel and The Girl With the Pearl Earring.
Steven Porter, senior associate at Pinsent Masons said: “This was a sensible decision by the Court of Appeal, highlighting what they describe as the ‘real prospect of success’ and the importance of the issues to be considered.
“The judgement in July did not, in our view, address some of the serious issues which use of PPNs in relation to these schemes poses. In many cases, HMRC checked and repaid the tax in question over 10 years ago – and is now trying to claw it back using new legislation.
“Taxpayers are being faced with notices demanding the upfront payment of millions of pounds, prior to any formal decision by the courts or tribunals. HMRC is moving much more quickly and aggressively than ever before. It is important that the new powers face proper scrutiny.”
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