A gang found guilty of making a film solely as a £2.8 million tax scam have been sentenced in the first prosecution for film tax relief fraud.
HMRC investigators found that the film, A Landscape of Lives, which it was claimed starred Hollywood A-list actors, was never intended for the big screen and was a sham production. The real intent was to defraud the public purse of nearly £1.5 million in VAT along with nearly £1.3 million in film tax credit claims.
Gang leader Bashar Al-Issa, 35, of Maida Vale, London, along with Aoife Madden, of Northern Ireland, Tariq Hassan, of Essex, Ian Sherwood and Osama Al Baghdady, both of Manchester, owned Evolved Pictures. They told their auditors that they had a budget of more than £19 million, provided by a Jordanian company, to produce a blockbuster film in the UK.
Evolved Pictures told HMRC that millions of pounds of work had been spent on the film, including paying actors and film set managers, claiming this meant a VAT repayment was due of £1,488,187. However, during checks HMRC found that the work had not been done and most of the so-called suppliers and film studios had never heard of the gang. Furthermore, capitalising on a scheme designed to support genuine British film makers, Evolved made fraudulent tax credit claims of £256,385.50, while preparing to submit a further claim of £1,033,337.
After they were arrested, the gang came up with an elaborate plan to cover their tracks and hide the fraud by shooting a film on a shoestring, called A Landscape of Lies, featuring two television personalities.
John Pointing, Assistant Director of Criminal Investigation at HMRC, said:
This gang thought they could exploit rules for genuine British filmmakers and thieve from the public purse for their own gain. They were wrong.
Falsely claiming VAT that is not due is illegal - so we are pleased that instead of this film flop going straight to DVD, these small-screen z-listers are going straight to jail.
The gang were found guilty on 12 March 2013. Confiscation proceedings are underway.
Film tax relief is administered by HMRC and is available to legitimate film makers for British films that are intended to be shown commercially in cinemas and of whose total production costs at least 25 per cent relates to activities in the UK.