HMRC have announced that they will be issuing current and former members of the Eclipse Film Partnerships an opportunity to settle their outstanding tax issues without being pursued for additional dry tax.

The Eclipse film partnerships were set up to secure Income Tax relief for investors through complex sets of transactions with the Disney Group of Companies, whereby they bought the licences to film rights and then sub-licensed those rights to distributors.

The Court of Appeal decided in 2015 that the transactions were not trading and an appeal to the Supreme Court was rejected in 2016. HMRC subsequently denied any tax relief claimed by members on the basis that the Limited Liability Partnerships (LLPs) were not trading. In 2018 HMRC went further, seeking the dry tax due on income in the LLPs that had been treated as loan repayments, although this income was never received by the individual members.

This settlement opportunity now provides members with the security that HMRC will not pursue the potential tax liabilities arising on those income receipts but in order to accept, each member must:

  • Give up any interest relief claims and pay the subsequent tax liabilities.
  • Pay interest on any late paid tax.
  • Give up any legal action in relation to Eclipse and HMRC.

Each member will have six months to accept from the date of notification.

For any member not accepting the settlement, HMRC will:

  • Continue to deny interest relief.
  • Pursue litigation for the Income Tax due on the member's share of the income received.

Useful guides on this topic

Supreme Court cuts down film schemes
The Supreme Court has dismissed an appeal by Future Capital Partners, the creator and a group of investors of the Eclipse 35 film scheme. The tax avoidance scheme failed because its activities never amounted to a trade.

External links

HMRC settlement opportunity for Eclipse Film Partnership members


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