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 Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
- 2 Greece debt crisis explained: A history of just how the country landed itself in such a mess
- 3 People all over the world are getting semicolon tattoos to draw attention to mental health
- 4 Greek debt crisis: Yanis Varoufakis's funniest (and most memorable) quotes
- 5 Swedish minister gives strongest case yet on why EU should stop turning away asylum seekers
Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
Greece debt crisis explained: A history of just how the country landed itself in such a mess
German conservatives are destroying Europe with austerity, says economist Thomas Piketty
Man dies instantly after shooting firework from top of his head
Isis schoolgirl Amira Abase who fled London to join terrorists in Syria mocks victims of Tunisia massacre
More Britons believe that multiculturalism makes the country worse - not better, says poll
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
Sickness and disability benefits could be reduced by £30 a week as part of £12bn welfare cuts
iJobs Money & Business
£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...
competitive: SThree: Are you passionate about sales?Do you have a keen interes...
£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...