Guy Hands sues Baker Tilly over film losses

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.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?