Exposed: the hundreds of City millionaires in film tax loophole

Wealthy traders and bosses joined football stars in scheme shut down by the taxman

Hundreds of highly paid City bankers and chief executives make up the vast majority of members of a tax avoidance scheme at the centre of a crackdown by the Revenue.

Alain Grisay, chief executive of F&C Asset Management, and Lance Uggla, who runs the financial data firm Markit, are among representatives from big business who are members of the Eclipse 35 film investment partnership loophole, an analysis of the accounts by The Independent has found.

Coverage of Eclipse 35, which was ruled against in a tax tribunal this week, has focused on Manchester United manager Sir Alex Ferguson, former England boss Sven Goran Eriksson and Nobby Solano, the ex-Newcastle United player. Other football stars including Bolton Wanderers' Jussi Jaaskelainen and the former Ireland international Graham Kavanagh are also named as members in the documents.

But it is the vast swathe of City traders, hedge fund managers and private equity advisers which stand out, giving a rare insight into how the financial world's richest players shield their assets from the taxman.

Of the nearly 300 names in the list of members, of those whose identities are traceable, there were 11 managers at Deutsche Bank, 10 former and current Goldman Sachs bankers, eight traders and managers at UBS, and more than 25 hedge fund managers from big firms including Brevan Howard and Walker Crips. Other banks whose staff feature repeatedly include Citibank, Barclays Capital, the broker Icap, JP Morgan and RBS.

Most of the City whizzkids involved appear to be traders or heads of departments likely to be earning hundreds of thousands of pounds a year, such as Stefan Tsonev, a managing director at JP Morgan, Magid Shenouda at Goldman Sachs, and Raymond Key of Deutsche. None was willing or available for comment.

Also appearing is Philippa Rose, sometimes claimed to be the most powerful headhunter in the City. She declined to comment on her investment in the scheme.

But this is just the tip of the iceberg, as many of the members of Eclipse 35 had common names that made their identification impossible.

Accountancy experts said dozens of similar schemes were in operation.

The murkiness of this particular scheme was highlighted this week, when HMRC barred Eclipse 35 from claiming tax relief on a £1bn tie-up with Disney. The relief would have been worth £404,000 for each of the high-net worth individuals involved who invested on average £173,000.

A spokeswoman for UK Uncut said the revelations showed "big businesses and bankers are profiting from everyone else's economic woes by cutting their tax bills."

Elsewhere, the taxman is currently investigating another film partnership, Ingenious Film Partners 2 LLP, in which City bigwigs including Centrica chief executive Sam Laidlaw and Dick Olver, chairman of the defence giant BAE, were investors for at least four years.

Cormac Marum, tax consultant at Harwood Hutton, said: "This kind of scheme is common – people balk at writing out enormous cheques when it's time for tax assessment, and ask themselves, 'what can I do about it?'

The wealthy investors involved in Eclipse 35 come from particular pockets of the country – many stem from Manchester's business community – and particular sectors at banks, which Mr Marum said was down to word-of-mouth recommendations as wellas the wealthy sharing financialadvisers.

How eclipse 35 worked

Barclays lent £790m to the film partnership, and its 289 members then topped out the pot with £50m of their own funds. Just over £500m of that cash was then paid to Disney for rights to its films Enchanted and Underdog. The scheme paid out £293m to Barclays for a decade-worth of interest payments for its original loan, and licensed the rights to the films back to Disney, at a rate of return of £1.02bn for 20 years. Eclipse was then claiming £117m in tax relief from the Revenue, due to its payout to Barclays. That would work out at an average £404,000 tax relief per investor, providing about £1m-worth of tax-free earnings. But this week HMRC acted to block the tax relief before it was paid out.

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own