HMRC settlement opportunity for Eclipse Film Partnership members
Find out the settlement opportunities for tax owed due to the Tax Tribunals and Court of Appeal finding that Eclipse Film Partners No 35 LLP was not trading.
The Eclipse Film Partners (numbers 1 to 40) Limited Liability Partnerships (Eclipse LLPs) were complex financial arrangements. They aimed to generate large interest payments on bank borrowings, presented as contributions to the capital of the Eclipse LLPs, so they could buy film rights.
The Eclipse members claimed relief for the interest payments against their income to avoid tax. Each Eclipse LLP entered into substantively identical arrangements.
Tax decision
The Tax Tribunals and Court of Appeal found that Eclipse Film Partners (number 35) LLP was not trading, and as a result, HMRC’s view is that Eclipse members are not entitled to any Eclipse interest relief.
The Courts did not decide the amount of the income from the complex financial arrangements or who would pay tax on it.
Settlement opportunity
HMRC will contact you with a settlement opportunity to resolve any Eclipse related tax issues.
We’re offering a settlement opportunity, which will be open for acceptance for 6 months from the date we notify you.
The settlement opportunity is only for individuals who are current or former members of any Eclipse LLPs and for tax issues arising from Eclipse.
It does not apply to any individual under criminal investigation by HMRC.
How to accept the settlement opportunity
You must:
- give up your Eclipse interest relief claims and pay the tax avoided
- pay the interest on the tax paid late
- give up any legal actions which are part of other Eclipse related litigation involving HMRC
Payment arrangements can be tailored to individuals’ circumstances, if appropriate.
HMRC will not pursue individuals for tax on income treated as paying back borrowings, including for periods after individuals had exited the LLPs.
The settlement opportunity will recover all the tax avoided and will also avoid further litigation.
If you do not accept the settlement opportunity
HMRC will:
- continue to disallow the interest relief claims
- pursue Income Tax on your share of the income through the Tribunal and defend Eclipse related litigation
Contact HMRC
If you’re an Eclipse member or an adviser of an Eclipse member, and you have a query about this settlement opportunity, contact HMRC on telephone: 03000 575 448.