As the Revenue clamp down on what were thought to be perfectly reasonable tax schemes, members need to be aware about the potential implications on their investments.
With the recession and problems over the deficit there is a cold wind blowing through the world of tax planning and investment as the Revenue, encouraged by the press and parliament, clamped down on what were thought to be perfectly reasonable tax schemes.
The process really got underway with the Revenue’s challenge to a film investment scheme called Eclipse 35.
Eclipse 35 was a film investment scheme, which many prominent figures in the game invested in, and which the Revenue successfully claimed at a Tax Tribunal was not a true trading vehicle but rather a device to avoid tax. There are many stages of appeal that are open to the organisers of the scheme and no doubt they will be pursued but at the present time these schemes, and others like them, are seriously called into question.
At the end of the long road of appeals and possible counter appeals, if the Revenue are right, then film schemes like Eclipse 35, and other film and similar schemes that involve, for example, investing in green energy or research into vaccines, could all fall in. The consequences for investors in the schemes can be catastrophic.
The way these schemes are structured is very complicated but if the Revenue is successful, the effect of a scheme not qualifying for tax relief could be that investors could become liable, not just for the tax that they were trying to save or postpone but very much greater sums – possibly up to five times the amount invested.
Unfortunately, it seems that the vast majority of professional advisors – accountants and IFAs – failed to point this out to the people who were investing in these schemes with the result that anyone suffering this kind of loss may well have a good claim against their advisor.
The problem is that the time for bringing such a claim is strictly limited and is getting shorter by the day.
Investors potentially have a short period of time in which to bring a claim which may be only six years from the date of investment into the scheme or possibly three years from the time when the investor became aware of the challenge – to their own scheme or to a similar scheme like Eclipse 35.
It is better to be safe than sorry and we would recommend anyone who has a possible problem in this area should take up the free advice scheme being coordinated by Pro Sport Wealth Management. Please call or email your enquiry directly on the contact details below.
Gareth Griffiths, Pro Sport Wealth
Call: 01204 602909
Email: gareth.griffiths@prosportwealth.co.uk
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