Four Sentenced for £100 Million Film Tax Avoidance Scheme

Published: 30/06/2016 | News

Four men were sentenced on Friday 24th June on charges of conspiracy to cheat the public revenue having cost the taxpayer £100 million by using tax relief measures set up by the government to encourage investment in the British film industry.

Keith Hayley, Robert Bevan and Charles Savill were each sentenced to 9 years imprisonment with conditional license available after 4.5 years. The starting point for sentencing was 12 years reduced by mitigating circumstances which included length of time since offences, length of trial and previous good character.

One other defendant, Norman Leighton a resident of Monaco, was sentenced to a two years suspended sentence. The starting point for his sentence was four years reduced on mitigation, which included ill health, foreign residency and his lesser involvement.

The Judge deemed it unnecessary to issue Directorial Disqualification orders given the length of the custodial sentences. He went on to say during sentencing that the case was “one of the most difficult and complicated cases I have seen presented at the Bar.”

The men were earlier this month found guilty of using an elaborate international tax avoidance scheme which involved a London based company called ‘Little Wing Films’ and numerous offshore companies, including one called ‘Fat Cat Films’.

The four defendants: salt co-director Robert Bevan, executive producers Keith Hayley and Charles Savill (formerly of Little Wing Films), and Monaco based financial advisor Norman Leighton used investors to inject over £76 million into the scheme. The investors, who included celebrities and sports stars, were led to believe they were investing in a legitimate scheme. However, the defendants inflated their expenses to show losses of up to £250 million enabling them to claim £100 million of taxpayer’s money in relief.

The men alleged they spent the £250 million in pre-production and development of films; however investigations by the HMRC uncovered these to have only been in the region of £4 million.

They falsified documentation and set up sham companies to hide the fraud. Patrick Harrington QC prosecuting on behalf of the Crown said investments in the scheme were transferred from the UK to an account in Monaco, the British Virgin Islands, Guernsey and then back to the British Virgin Islands, before returning to the UK. The sham companies, which were registered in Geneva and the Chanel Islands, served to finance the limited recourse loans made to investors, which made the scheme effective as a tax mitigation scheme.

Patrick Harrington QC highlighted during the trial that “Tax avoidance, although morally repugnant in the minds of many, is not against the law. Evasion is. This is evasion.

 All four men were found guilty earlier this month and sentenced on Friday 24th June at Birmingham Crown Court.

Patrick Harrington QC is part of the Crime Team. The case has been reported in The Times (external link subscription required) and other news outlets.