We understand that HMRC are set to issue payment demands for tax far in excess of the amount that individuals invested in the various Eclipse Film Scheme partnerships in 2007. The APNs follow from the April 2016 decision of the Supreme Court in refusing the Eclipse 35 LLP permission to appeal an earlier decision of the Court of Appeal.
The reason that the amount of the APNs far exceeds the original investment by individual partners is because of the highly-leveraged nature of the investment. On the basis of the facts found by the First Tier Tribunal in its 2012 hearing of the appeal, approximately 94% of the partners’ investments in Eclipse 35 were funded by non-recourse borrowings facilitated by the scheme promoter and secured by a charge given by the partnership over a letter of credit issued by Barclays Bank.
We understand that many of the investors in Eclipse now face the prospect of bankruptcy because they will simply be unable to pay the liability on the APN. Other investors are understood to be considering whether legal action might be possible against the scheme promoter and / or its intermediaries for “mis-selling” or “breach of contract” as there now seems to be little prospect of mitigating their tax liability with HMRC.
If you are an investor in Eclipse or if you have invested in another film scheme (or any of the other, similarly leveraged investments which is the subject of HMRC investigation) and would like to discuss your position free of charge with an independent adviser, please give us a call.