Film partnership avoidance scheme was mis-sold – Horner v Allison


Anti Avoidance

A recent case was heard at the High Court (Horner v Allison) concerning the sale of a film partnership avoindance scheme.
In this case, the Claimant, was Mr Horner who was a chartered accountant as a managing director at Atos KPMG Consulting Ltd.
On recommendation by a colleague (whom received commission for the recommendation), Mr Horner attended a presentation by Taipan Creative LLP.  The scheme was described as ‘a unique low risk high return investment proposition’.  One of the directors, Miss Allison called herself a specialist in film tax investment schemes and led him to beleive that the scheme had been approved by HMRC.
Under the scheme, Mr Horner initially received a refund from HMRC which was paid over to Taipan who deducted 80% of the refund as their fee before paying it over to Mr Horner.  A tax refund of £168,756.30 was received and Mr Horner was given his 20% by the defendants (£33,750).
HMRC investigated the scheme and, found that the scheme failed to meet the necessary requirements for the relief for film patnerships. Mr Horner therefore faced a demand to repay the whole tax rebate with interest and penalties;  at a total of £207,000. There had been no HMRC approval of the scheme.
The court found in favour of Mr Horner, finding that Miss Allison had made representations which she knew to be untrue and as a result was liable to Mr Horner in deceit. Mr Horner was entitled to recover damages from Miss Horner amounting to £185,832.25.  However it appears unlikely that Miss Allison will be able to pay over the sum.