Guy Hands sues Baker Tilly over film losses
Friday 11 July 2008
The private equity tycoon Guy Hands has had his hands full trying to make money from the music industry since buying EMI last year, and now it seems he has taken a hit from investing in the film industry as well.
Mr Hands is one of 75 investors suing an accountancy firm for alleged negligent advice over a tax scheme that left them with a bill for £23m through investment in films including one about a seven-foot boxing shrimp.
Mr Hands has been giving evidence in the High Court over the past two days as part of the suit launched against Baker Tilly and the lawyer Adrian Shipwright, of Pump Court Tax Chambers. Both plaintiffs deny the charges in a case expected to finish around the end of the month.
The investors, who include Mr Hands' wife, Julia, and the former EMI boss Eric Nicoli, blamed Baker Tilly and Mr Shipwright for claiming there was "very limited risk" in a plan to invest in films and make a quick profit by claiming tax relief.
Mr Hands said he felt comfortable backing the scheme "because a reputable firm of accountants, Baker Tilly, and tax counsel had advised on the schemes and had indicated they would receive the anticipated tax treatment. Their confidence that the tax aspects of the scheme would work was the reason that I invested in them."
The boss of Terra Firma said he had been drawn to the scheme "as there appeared to be very little risk of not receiving a return on investment ... If I had been informed there was a real possibility I would lose up to 60 per cent of my investment, I would not have invested in the film schemes".
Mr Hands invested in three films between 2001 and 2002 via the financing vehicle Little Wing Films. The scheme did not depend on the films being successful. The projects included Crust, which was not released in the UK, although it found cult success in Japan. It follows pub landlord Bill, a failed boxer and borderline alcoholic, who teaches a giant shrimp the finer arts of pugilism.
"It was clear that to succeed and to generate a return on the sums invested did not rely on the success of the film but rather they relied on the investment receiving the anticipated tax treatment," Mr Hands said.
The scheme was set up to use rules introduced by the Inland Revenue 10 years ago, in which investors could defer tax on sheltered income for 15 years by investing in films. It fell apart when the rules were changed in 2004, and investors were told they had to invest all, rather than part of the sum they had pledged, to claim the full tax relief. Mr Hands had to repay £15m in disallowed tax relief, with a further £2m interest.
- 1 BBC election debate: The one photo that summed up the whole 90-minute leaders debate
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 18th century sex toy found in 'toilet of sword fighting school' in Poland
- 4 'I wish my teacher knew...': Young students share their 'heartbreaking' worries in notes
General Election 2015: David Cameron catching up in polls – but he badly needs a clear lead
The Hubble Space Telescope's amazing journey 25 years on
South Africa xenophobic attacks: Shops looted and violence on streets of Johannesburg as foreigners are forced to hide in police stations
Earthworms rain down from skies over Norway, puzzling scientists
18th century sex toy found in 'toilet of sword fighting school' in Poland
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
If I’m being racially abused I don’t need a white stranger with a saviour complex to rescue me
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
Russian warships in English Channel 'to conduct anti-aircraft and anti-submarine military drills'
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...