HM Revenue and Customs won a case against Ingenious Film Partners in August 2016 claiming that the scheme it promoted artificially created losses through investments in films so investors could claim tax relief.
The court found that the schemes were not legitimate investments but a way for investors to avoid paying tax.
It ruled that investors should only receive tax relief on 30% of their investment, not 100%, resulting in the £700m tax bill.
At the time, the scheme’s operator Ingenious hit back at HMRC ”inaccuracies” and confirmed that it would appeal the decision.
On 17 May, appeal tribunal judge Charles Hellier ruled that the deductions were not allowable, although he admitted to having “misgivings and reluctance” over the decision.
“We have not found this an easy decision, and are comforted by the fact that others have had similar difficulties with the concept of capital.”
The ruling gives Ingenious the right to appeal, which they must do within 56 days.
According to newspaper The Guardian, Ingenious has confirmed that it will appeal.
The Ingenious Media website states that the company was founded in 1998 and has produced and co-financed hundreds of feature films and more than 550 hours of television programming.
Its partners include 20th Century Fox, Sony Pictures, NBC Universal, Warner Brothers, Paramount Pictures, Disney, Lionsgate, Film4, Pathé, the BBC, ITV and Endemol Shine.
The company describes itself as the largest private investor in the UK creative industries. Ingenious’ investors have helped independent films; such as Selma and Mr Turner come to screen and backed profitable blockbusters like Life of Pi and Avatar.
