“High quality” independent film & Tv projects

The Altus Media offering (“Altus”) promoted by Chancery (UK) LLP (“Chancery”) was marketed as an opportunity to “invest and participate in the entertainments industry whilst at the same time taking advantage of significant, non-controversial UK tax breaks”. A number of companies were formed between 2012 and 2014 to execute the Altus strategy and revenue was intended to be generated through the production, co-production and exploitation of “high quality” independent film and television projects.

Due to the extremely risky nature of the film and TV industry, the various companies were meant to apply strict mitigation criteria and negotiate primary recoupment positions. The companies would also utilise the services of expert third party advisors, including Prescience Film Finance who were purported to be one of the UK’s leading financiers of feature films. The primary downside protection however was derived from the various tax reliefs afforded by the Enterprise Investment Scheme (“EIS”) that it was anticipated that the Altus companies would qualify under.

The EIS rules are extremely prescriptive and apply to both the investment itself as well as the ongoing operation of the business. If these rules are not adhered to then all associated reliefs are denied and, where applicable, investors would be required to repay any benefit derived from the investment.

Failure of the Companies

In most cases the companies did not perform to expectations as the various film and TV investments simply did not derive any where near the returns projected in the promotional material. This has resulted in the majority of companies entering into voluntary liquidation.

Chancery itself went into liquidation in 2015, owing creditors hundreds of millions of pounds.

Tax Implications

Several years ago, HMRC began an in depth investigation into the trading activities of the Altus companies and obtained numerous documents outlining how the investments were structured, how the scheme was marketed and how the various companies were run on a day to day basis.

Based on the outcome of their investigations, HMRC concluded that the shares acquired in the various Altus companies did not qualify under the EIS and accordingly all reliefs should be denied. This was attributed to numerous failings in relation to both the issuance of the shares themselves and how the trade was conducted.

This means that the majority of Altus investors are in a position where their shares in the companies are worthless and all EIS reliefs claimed now need to be repaid to HMRC.

Our internal tax team has significant experience of dealing with the tax affairs of our clients and has built strong relationships with key individuals within the various relevant HMRC units. We can either engage directly with clients and represent their interests on a consultancy basis, or work with clients existing advisors to provide an in-depth and complimentary advisory service.

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