HMRC has claimed wins over two major tax avoidance battles against the Ingenious Film Partnership and Icebreaker avoidance schemes in cases worth more than £820 million in tax owed and interest.

However, the battle between HMRC and Ingenious Media continues as Ingenious considers appealing the decision which will see investors in its film partnership schemes, which HMRC said tried to use artificial losses arising from backing a range of films, face large bills as well as £434 million in unpaid tax.

The hearing involved the following entities: Inside Track Productions, Ingenious Film Partners 2 and Ingenious Games.

The Ingenious scheme members claimed to have financed 100 percent of the cost of producing films and games.

Yet, according to HMRC, the bulk of the cost was written off in year one, giving the partners large losses which were set against other income. HMRC said 30 percent of the expenditure was actually funded from the partners’ cash, the other 70 percent it said was routed through the partnership on paper only.

In its decision, the tribunal dismissed the appeals of Ingenious Games and allowed in part the appeals of Ingenious Film Partners 2 and Inside Track productions.

It found that all three entities were trading to make a profit and that Inside Track incurred only 35 percent of the cost of production and Ingenious Film Partners 2 and Ingenious Games incurred 30 percent of the budgeted cost of each film and game.

Ingenious is considering appealing the decision, according to a spokesperson, who said HMRC’s decision to bracket Ingenious together with the Icebreaker scheme shows a “fundamental misunderstanding of the key point in the Tribunal judgement”.

“The Tribunal has drawn a clear distinction between the Ingenious film partnerships and all other film arrangements, including Icebreaker, that have appeared before the courts in recent years by recognising that the Ingenious film partnerships were trading and that those trades were conducted with a view to profit.

“This is in stark contrast to Icebreaker and other tax avoidance schemes such as Eclipse 35 which were found to not be trading and as a result, set up for the sole purpose of avoiding tax.

“We are in the process of studying the detail of this very long and complex judgment (which runs to nearly 350 pages) and are actively considering, together with our external legal team, the terms of an appeal,” the spokesperson said.

HMRC director general of enforcement and compliance, Jennie Granger, said: “These were some of the biggest films of all time, and the schemes involved people claiming far more in tax than they invested in the first place. We always say that if something is too good to be true then it probably is. And in this case the long legal battle will mean that investors face even bigger bills for interest and legal costs.”

HMRC has now secured more than £1.2 billion in disputed tax from wins in avoidance litigation since the beginning of April.

It also comes on the back of HMRC\'s continued success tackling tax avoidance through the Accelerated Payments regime. In the two years since the legislation was introduced, more than £2.5 billion has been paid on Accelerated Payment Notices, and more than 50,000 notices have been issued.

Ingenious continues to fight its corner against HMRC who it said has made a number of "false assertions”.

In a statement, Ingenious said it would like to make the following clarifications on the record:

"1. The Ingenious investors received no more tax relief than the cash they invested. Furthermore, investors have incurred no legal costs in this fight, all of which have been paid for by Ingenious.
2. Although part of the tax relief on film costs has been disallowed a corresponding proportion of film income will no longer be taxed. In the case of all our partnerships, this will result in less taxable income being brought into account than would otherwise have been the case.
3. As a result we believe investors are better off now than if they had accepted HMRC\'s offer to settle four years ago, and considerably better off than the position HMRC had attempted to argue at the Tribunal which would have seen them receive no tax relief on their investment."

Neil Forster, Ingenious chief executive, said: “HMRC appears to be deliberately confusing the Ingenious case with proven tax avoidance schemes and making assertions which are factually wrong.

“The Ingenious investors received no more tax relief than the cash they invested. Furthermore, investors have incurred no legal costs in this fight, all of which have been paid for by Ingenious.

“We are disappointed that the Tribunal has restricted tax relief on the costs of the films however believe that investors are better off as a result of this judgement than if they had accepted HMRC\'s offer to settle four years ago, and considerably better off than the position HMRC attempted to argue for some years before the Tribunal which would have seen them receive no tax relief on their investment.

“It is important to note that as well as the restriction on loss relief the Tribunal also ruled that the tax on film income should be restricted, reducing the amount of tax payable by investors.

“We remain disappointed that the Tribunal decided to award film investors only partial loss relief and to restrict all loss relief for games investors. We are actively reviewing the judgement and considering an appeal to seek the maximum redress for our investors.”