Hollywood’s failed Eclipse and its £100million lawsuit

13 November, 2017

As the news brims with tales which could be lifted from a blockbuster film; the old adage ‘all publicity is good publicity’ is being reconsidered.

A recent bump on the rocky Hollywood road relates to a ‘film scheme partnership’ Eclipse 35; between 2005 – 2007 individuals invested in this scheme, which provided a tax efficient and apparently legitimate opportunity to minimise their taxable income

(by purchasing films and renting them back to the relevant studio at a loss).  In April 2017 the Supreme Court confirmed the decisions of the first tier tax tribunal, the upper tribunal and the Court of Appeal: Eclipse 35 is a tax avoidance scheme, which means its investors may face punitive tax bills.

A number of the investors, who include many high profile individuals, claim they were misled about Eclipse 35 and are bringing a £100 million legal case against Disney, HSBC, Barclays and the Bank of Ireland.  HSBC’s private banking unit structured the scheme, and the other banks in question funded the schemes, lending money enabling investors to maximise their investment. Disney was the studio selling and then leasing back its films. 

Previously, successful cases have only been brought against the financial advisers who directly advised on these investments; it is yet to be seen whether this case will extend the recourse options for misled investors and penalise the institutions which developed, promoted and financed various schemes. It will be an uphill struggle for the investors to persuade the courts that in absence of a direct contractual relationship that the banks/Disney can be held responsible.

If you are concerned you have, or may, sustain losses following unreliable financial advice or services please contact Pradeep Oliver at pradeep.oliver@crippspg.co.uk or on 01892 765 453 for a no-cost initial consultation.