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Volume XI, Number 209


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Banks Avoid Liability For Failed Tax Relief Plans Under Film-investment Scheme

Litigation surrounding film finance schemes continues to rumble on in the High Court.  Earlier this month, the High Court in Barness v Ingenious Media Ltd [2019] EWHC 3299 (Ch) granted applications by two banks Coutts and Natwest (“Banks“) to strike out a number of lender claims in a case that is part of the “Ingenious litigation”.

The investors had argued that the “packaging” of the bank loan with a third party investment, meant that they formed part of a single investment proposition. They argued that the relationship between the Banks and the investors was not therefore a conventional one of banker and borrower.


Between 2002 and 2007, a number of schemes were promoted for investment in the British film-industry through Ingenious Media, as tax-efficient vehicles through which individual taxpayers could contribute funds to limited liability partnerships (“LLPs“), offsetting their share of the LLPs’ losses against other taxable income.

HMRC eventually ruled that the schemes did not work as intended, and did not give rise to the intended tax relief for the investors.  Following this ruling, over 500 investors have issued claims, in the Ingenious Litigation, which variously seek to recover the investors’ losses from a range of defendants, including banks and independent financial advisers (“IFAs“) who advised on the particpation in the schemes.

This particular case included claims against the Banks by four individual investors for (i) breach of contract (based on terms said to be implied into the contracts between them and the Banks); (ii) negligence (based on duties of care owed in tort); and (iii) claims based on the Banks’ alleged vicariously liability (for breaches of duty owed to the investors by the IFA).


Nugee J considered the Banks’ applications to be “well-founded“. The contractual and tortious claims were struck out and summary judgment was granted against the investors on the vicarious liability claims.

Despite the opportunity being presented to the investors as a single package and although the Banks and the IFA were working closely together, they each carried out their own functions as part of their own independent businesses. The Judge resolved, this should not be “conflated as if [the IFA] was giving advice as part of the banks’ activities.”

It was acknowledged that the Banks were willing to make loans to participants in the Ingenious schemes and allowed, or even encouraged, the IFA firm to promote the availability of these loans to its clients as part of a package. But this did not suppose “any logical connection” that there was an offer by the Banks to undertake an overarching responsibility for management of the investors’ wealth.

In order for the tortious claim to succeed, the Banks must have owed a duty of care to the investors. The judge accepted that this would require some communication between the Banks and the investors to the effect that the Banks were assuming responsibility for the tasks in question, and the investors would have had to rely on that. No such communication or reliance was pleaded.


The implications of this judgment for the outstanding lender claims under the Ingenious litigation are not yet clear. However, as Nugee J remarks, “no doubt the banks hope that if this application succeeds, it will have a consequential effect on whether other similar claims are sustainable.”

In the meantime, the various pieces of litigation around the wider issue of participation in film finance schemes (not just through Ingenious) will no doubt continue for many years to come, so watch this space.

© Copyright 2021 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 17

About this Author

Garon Anthony Litigation Attorney Squire Patton Boggs Birmingham, UK

Garon is a partner in the Litigation Practice Group. He advises clients across the full range of commercial dispute issues, including cyber liability/data breach, professional negligence, banking, pensions and insurance.

Garon regularly acts for clients who are subject to investigations or disciplinary proceedings by national and international regulators, including most recently the Financial Conduct Authority, the Financial Reporting Council and the Dubai Financial Services Authority.

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Rose Chaudry, Squire Patton, Commercial Litigation Lawyer, Tortious Contracts Attorney

Rose Chaudry is an associate in the Litigation team with expertise in general commercial litigation. Rose qualified in September 2015 after completing her training contract with the firm.

Rose regularly acts for a diverse client base, including individuals and companies, from SMEs to PLCs. Rose has experience advising on a wide-range of matters of both a contractual and tortious nature, including breach of contract, breach of warranty, debt recovery, professional negligence and insurance.

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