More than 100 high net worth individuals who invested millions in television and film production schemes which yielded neither the profits nor the tax advantages which they had expected have had their hopes of compensation boosted by a High Court ruling.
Around £75 million had been invested by about 240 individuals in the schemes, which were run by four limited liability partnerships. HM Revenue and Customs had refused to recognise them as legitimate tax mitigation schemes and many of those who lost money suspected that they had been little more than vehicles for fraud. Criminal proceedings were pending against three men who established the schemes.
Lawyers representing 103 investors had taken legal action against the partnerships and sought disclosure orders against a firm of solicitors which had in its possession a large quantity of documents relating to the same. There was no allegation of wrongdoing against the firm, which had ceased to be instructed by the partnerships and which had held the documents for some years in connection with a tax appeal.
In refusing to issue an injunction against the firm, the Court rejected as ‘at best tenuous’ arguments that it had become innocently ‘mixed up’ in the partnerships’ alleged wrongdoing. However, in allowing the investors’ application, the Court ruled that, on a true interpretation of the partnership deeds, they had an express and unqualified right to inspect the books and records of the partnerships.