Tax specialist Terence Potter, 55, devised and promoted, jointly with IFA Neil Williams-Denton, 42, a number of “fraudulent schemes to wealthy professionals”, HMRC reported.
Mr Potter, formerly of Singapore and Monaco, was found guilty of one charge in September and pleaded guilty to another matter. The former partner in Ernst & Young was sentenced to 8 years in jail.
Mr Williams Denton, from Bolton, was an adviser for Greystones Financial Services at the time of his arrest. He actively ‘sold’ and promoted Potter’s schemes to wealthy individuals. He was sentenced to 6 years.
Officials said the schemes were portrayed to HMRC as being tax avoidance schemes exploiting legal loopholes.
But they were ‘bogus’ and “fraudulently underpinned by false documents, making them tax evasion”, HMRC said.
In a statement HMRC said: “Potter set up two partnerships that were sold to the wealthy investors. One produced a film called 'Starsuckers', the other was a project to develop a package to be made into a film by others called 'Mercedes the Movie'.
“Together both partnerships claimed to have spent £5.7 million on the projects. This created artificial losses that allowed the investors to claim back PAYE tax they had paid.
“The partnership declared the losses in its tax return and so did the investors, which would have allowed them to recoup up to £40,000 in tax relief from HMRC, for every £20,000 they had invested. However, as the scheme was illegal their claim for tax relief was false. The claims were supported by false documents produced by Potter.”
Jennie Granger, director general of enforcement and compliance at HMRC, said: “This was pure greed by a dishonest tax agent, a financial adviser, and people who were already wealthy individuals. Those found guilty had no interest in the film industry, or regard for the impact on honest taxpayers.
“While it started with a tax adviser pushing a deeply fraudulent tax scheme, wealthy professionals investing in such schemes should be aware of the pitfalls. Those found guilty believed they were above the law, cheating the system by masking tax fraud as investment in films.
“Ground-breaking work from our expert investigators uncovered the full extent of the fraud, and this verdict shows that those who engage in this sort of activity are not beyond our reach.”
In a previous trial, which can only now be reported as restrictions have been lifted, three investment bankers, James Hyde, Phillip Jenkins and Hamish MacLellan were sentenced for taking part in the fraud. Their trial took place in September 2015 and all three received custodial sentences.
Over 100 officers from HMRC took part in the operation that led to the arrests in February 2012. Eighteen properties were searched and computers, business records and mobile phones were seized.
The majority of the tax refunds were withheld by HMRC and although £500,000 had been paid out initially, this has since been recouped by HMRC.