Film fraudsters in the spotlight following HMRC tax investigation

Four men at the centre of a film investment scheme, who promised their wealthy clients highly lucrative HM Revenue & Customs (HMRC) tax repayments, have been found guilty of tax fraud.

The scheme, created by Little Wing Films, run by accountant Keith Hayley and London-based financial advisors Robert Bevan and Anthony Charles Savill, claimed investors would achieve 30 per cent returns.

Their clients, including football players, investment bankers and a pop star, were all duped by the gang’s false claims that for every £100,000 invested, higher rate taxpayers would receive £130,000 in tax repayments from HMRC.

The men falsely claimed to have invested £275million into film projects, using off-shore companies to cover their tracks, but, following a tax investigation by HMRC, the fraudulent activity was exposed.

HMRC discovered that although the men claimed to have spent more than £250 million on pre-production and development packages for film projects created in Monaco, the packages had, in fact, only cost £4 million and had been created in the rather less glamorous location of Little Wing’s London offices.

The HMRC tax investigation found that more than 275 clients were scammed. Between them, they had invested more than £76 million, believing that the scheme was helping the British film industry and was also a legitimate way of reducing their tax bills.

Overall, the gang falsely inflated expenses to more than £275million to increase the scheme’s financial losses, enabling investors to collectively claim around £100 million in tax repayments. HMRC will now begin to recover these repayments from the investors.

Norman Leighton, an accountant and corporate services provider, based in Monaco, helped create the illusion that more than £250million was being spent on genuine activity in Monaco.

Hayley, Bevan and Savill, along with their associates, falsified paperwork to deliberately mislead HMRC investigators. In an attempt to hide their fraud, they created off-shore companies, including Fat Cat Films Ltd, and falsely exaggerated the amounts that had been invested into the scheme and the expenses paid out.

They arranged for companies to be registered in the British Virgin Islands that allegedly operated in Monaco, Geneva and the Channel Islands, all fronted by family friends in the Philippines and Kolkata.

The HMRC tax fraud investigation found that, in fact, each did little more than pass investor funds through their bank accounts, from one to another, numerous times, to inflate the amount invested and therefore the scheme’s losses.

The men, who were found guilty of Conspiracy to Cheat the Public Revenue, at Birmingham Crown Court, are currently awaiting sentencing.

Dr Anjulika Salhan, a director and tax investigation specialist with Salhan Accountants commented: “HMRC has been cracking down on spurious investment schemes recently. It takes a particularly dim view of professional intermediaries, such as accountants and financial advisers, committing tax fraud of this kind.

“This particular scheme appears to have been promoted as a legitimate method of mitigating tax, but, in reality, it was a scam which deliberately set out to defraud HMRC.

“The clients who signed up to this scheme, believing they had made smart financial decisions, will, in turn, now be subject to HMRC scrutiny, as attempts are made to recover the erroneous tax repayments.”

Anjulika added: “At Salhan Accountants, we work extremely hard for clients subjected to a taxation investigation. We not only clarify the issues and the process, but come up with solutions too. Our experience, professional reputation, forensic attention to detail and negotiating skills mean we are well-placed to achieve positive outcomes.

“Whether an individual or company, talking to us is your best step towards addressing a taxation investigation and moving on with your life.”

For more information about our taxation investigation services, please contact us.