Ingenious Games LLP and Others and The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Mrs Justice Falk,Judge Herrington |
| Neutral Citation | [2019] UKUT 0226 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,26 July 2019 |
| Date | 26 July 2019 |
| Published date | 26 July 2019 |
[2019] UKUT 0226 (TCC)
Appeal number: UT/2017/0150
UT/2017/0151
UT/2017/0151
INCOME TAX AND CORPORATION TAX –– LLPs established to carry on
activities relating to the production of films and games – individual members
of the LLPs making capital contributions for membership – funding also
coming from commissioning distributor – Whether activities carried on by
the LLPs constituted a trade – Whether activities of the LLPs carried on
with a view to profit – Whether expenditure incurred by the LLPs equal to
100% of production budget of film or game – Whether expenditure incurred
wholly or exclusively for purposes of LLPs’ trade – Whether LLPs’
accounts compiled in accordance with generally accepted accounting
practice – Whether LLPs’ expenditure on film and games rights was capital
expenditure for tax purposes – Income Tax (Trading and Other Income) Act
2005, ss 25, 26, 33, 34, 863 – Corporation Tax Act 2009 ss 46, 47, 53, 54,
1262, 1273
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
INGENIOUS GAMES LLP
INSIDE TRACK PRODUCTIONS LLP
INGENIOUS FILM PARTNERS 2 LLP
Appellants /
Respondents
- and -
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS
Respondents/
Appellants
TRIBUNAL:
MRS JUSTICE FALK
JUDGE TIM HERRINGTON
2
Sitting in public at The Royal Courts of Justice, Rolls Building, Fetter Lane,
London EC4 on 4-7, 11-14, 18, 22 and 25-28 March, 1-5 and 8-10 April 2019
Pushpinder Saini QC, David Milne QC, Richard Vallat QC, James Rivett QC,
Edward Waldegrave and George Molyneaux, Counsel, instructed by White &
Case LLP, for the Appellants (“the LLPs”)
Malcolm Gammie CBE QC, Jonathan Davey QC, Catherine Addy QC, Michael
Jones, Ruth Hughes, Imran Afzal, Nicholas Macklam, Sam Chandler and Oscar
Schonfeld, Counsel, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for the Respondents (“HMRC”)
© CROWN COPYRIGHT 2019
3
GLOSSARY
Terms
Approved Production the budget agreed for the production of a film as set
Budget out in the relevant PSA
Approved Cashflow the schedule attached to a PSA which phased the
receipts of money into the Production Account over the
period of the making of the film
BR Borrower’s Receipts, being 50% of the relevant LLP’s
receipts under the Waterfall
BDR Borrower’s Distributable Receipts, a percentage
(varying with GDI) of BR
Completion Guarantor an entity (being an associate of the CD for Studio films)
which guaranteed to complete the relevant film on
budget or abandon it and return monies to the parties
CD a Hollywood studio or vehicle formed by independent
producers and other financiers and which entered into
contractual arrangements with an LLP in relation to the
production and distribution of a film
CDA a commissioning and distribution agreement entered
into between a CD and an LLP in relation to the
production and distribution of a film
CM in relation to an LLP, its corporate member
Commissioning Distributor a structure developed by Ingenious and constituted by
Model the suite of agreements referred to in this decision (see
[16] and [82] below)
CTA 2009 Corporation Tax Act 2009
Decision the decision of the FTT initially released on 2 August
2016, as revised and corrected, and which is the subject
of these appeals
Deed of Acknowledgement a deed incorporating a notice of assignment and
etc. irrevocable payment instruction pursuant to which
monies equal to BDR or BR under the Waterfall
were agreed to be directed to be retained by the CD
EP an Ingenious company which agreed to render
Executive Producer services in relation to a film or
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