Monday, March 05, 2018
06.35PM / By Kirsten Hastings, on 21 Feb 18 for Tax Avoidance
The next chair of the UK’s Financial Conduct Authority
said he made an “error in judgement” when he used a tax avoidance film scheme
promoted by Ingenious, a firm that has lost several court battles against HM
Revenue & Customs.
He is expected to take up the role in
On Tuesday, he appeared before the
Treasury Select Committee and said that the Ingenious Film Partners 2 scheme
had been recommended to him by a financial adviser.
Randell paid into the scheme between
2006 and 2011 and said that he had been told it was approved by the UK taxman.
“I was reassured that this partnership
had been discussed with senior officials at HMRC, who indicated that they
approved of it,” he said to the committee.
“It’s clear to me now that, far from
taking any comfort from that, I should have seen it as a warning signal.”
Letter to Treasury
In a bid to head off questions around
his involvement with Ingenious, Randell wrote to the permanent secretary of HM
Treasury to address the matter on 16 January.
“I thought it would be helpful to
record in writing what I told the panel at the interview.”
He explained thathe had invested in
the scheme, which was promoted by his financial adviser.
“I also explained that I had fully
settled my tax affairs in relation to the partnership, by repaying as requested
by HMRC an amount of tax relief originally granted by them. I also confirmed
that I had withdrawn from the partnership.”
After the scheme was ruled to be
invalid, Randell had to repay £114,000 ($159,421, €129,003) plus interest.
He admitted to the panel that his
decision to invest in the scheme was “an error of judgement which I regretted”.
“I did not elaborate on this at the
interview but I regret failing to independently investigate the assurances I
received that HMRC were content with the partnership arrangements,” Randell
Ingenious Media was founded in 1998
and has four operating divisions; investments, ventures, asset management and
In August 2016, Ingenious lost a case against HMRC which said it used artificial
losses arising from investments in a range of films, including blockbusters
Avatar, Life of Pi and Die Hard 4.0, to claim tax relief.
The First Tier Tax Tribunal ruled that
the investors should only receive relief on 30% of their investment, not 100%
as was claimed.
The result was a £700m tax bill for
the many famous actors and footballers that invested with Ingenious.
In May 2017, Ingenious appealed the
ruling but it was struck down, despite the judge admitting to having “misgivings and reluctance” over the decision.
A further appeal was lodged the following month.
A group of celebrities, including
ex-Premier League footballers, launched their own case against the financial advisers who recommended the
scheme in September.
They were unsuccessful.
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