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 Isis 'jihadi bride' claims forced sex with Yazidi girls is never rape because Koran condones it
- 2 New Zealand 'the best country to work as a prostitute', says sex worker advocacy group
- 3 Purity balls: Girls in the US making virginity pledges as fathers vow to 'protect purity'
- 4 Mother 'will allow son's circumcision in return for release from prison'
- 5 Female Muay Thai champion hustles coaches to give them a beating
Greek hospitals cannot afford painkillers, scissors or sheets as budget cuts bite
Purity balls: Girls in the US making virginity pledges as fathers vow to 'protect purity'
Female Muay Thai champion hustles coaches to give them a beating
Puerto Rico, island of lost dreams: People are leaving the debt-hit territory in droves as near neighbour Cuba's star rises
Picture of couple posing with beached dolphin 'that later died' causes outrage
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...