'Starsuckers' film tax scheme sees tax adviser jailed

A TRIO of City traders and their accountant have been convicted of conspiring to cheat the tax authorities by investing in a film finance scheme.

James Hyde, Hamish Maclellan, and Phillip Jenkins all worked for US investment bank Bear Stearns, before moving to Jefferies International, where they earned more than £1m a year each in 2009/10.

Terence Potter, a Monaco-based former tax partner at EY, pleaded guilty to the charge of conspiring to cheat HMRC, reports New Model Adviser.

The three Jeffries International traders were convicted in September after claiming to be “active members” of a film finance partnership that invested in the film Starsuckers – a picture purporting to examine the cult of celebrity.

The case can now be reported after a second interlinked trial culminated with acquittals for three former RBS bankers and a financial broker, the Financial Times reports. In the second case, defendants were cleared by a jury at Southwark Crown Court of one count of conspiring to cheat HM Revenue & Customs by investing in a film scheme.

In the second trial, three former RBS bankers Vincent Walsh, Jason Edinburgh, and ex-RBS global head of listed execution Assad Amin, along with Michael Elsom – a senior broker at brokers Marex Spectron – were all cleared by a jury of one charge of conspiracy to cheat the HMRC through investing in a film finance scheme.

In their trial, they denied any wrongdoing and claimed they were unaware of their “active member” status, which required them to do ten hours’ work per week toward the film’s production in order to qualify for their tax reliefs.

Financial adviser Neil Williams-Denton introduced the RBS bankers to the scheme and was found guilty on this week of one count of conspiring to cheat the revenue. He had also been convicted in the earlier trial.

The prosecution alleged the bankers submitted “hundreds of pages” of false diaries detailing the hours they supposedly worked on a film called Mercedes the Movie in order to claim sideways tax relief from their tax bills. The film was never made.

The acquitted RBS traders all denied wrongdoing and conspiring to cheat the Revenue. They said accountant Potter, who helped set up the film scheme, had sent them the records, which they forwarded on to HMRC, but they had been too busy to check what was being sent on their behalf.

Film schemes have become a common method of attempting to deprive the public purse of tax, with HMRC treating such cases extremely aggressively. Often, those seeking to set up film schemes attempt to take advantage of tax incentives put in place by the government in order to stimulate the British TV and film industries.