In their latest list of their annual top 20 cases to be heard in the courts of England and Wales, The Lawyer has selected the Eclipse litigation as one of the most prominent cases of 2024.
The Eclipse litigation involves two jointly-managed actions brought by two large claimant groups, one represented by Stewarts and the other by Edwin Coe. Stewarts partners James Le Gallais and Alex Lerner instruct 3VB’s Jonathan Davies-Jones KC and Serle Court’s James Mather and Mark Wraith. The trial commences on 29 January and is listed for nine weeks.
The Lawyer suggests that 2024 “promises to be another landmark year for the English courts”, and points to growing numbers of class actions and international cases as trends to watch. Read the full Top 20 here (subscription required).
The Lawyer on Eclipse
This £240m claim against HSBC has all the hallmarks of a Hollywood blockbuster, with claimants alleging deceit, conspiracy and joint tort-feasance against the banking giant. HSBC has instructed Norton Rose Fulbright to defend two jointly managed actions being pursued by Edwin Coe and Stewarts on behalf of claimants who contend they suffered financial losses because of the tax-advantaged film investment scheme, ‘Eclipse’.
The tax scheme was devised by HSBC’s Private Wealth Solutions’ team, and marketed by Future Capital Partners to investors between 2005 and 2008, with profits shared by both entities. Claimants allege the scheme was marketed as a genuine film distribution business involving feature films produced by Disney, as such participants believed they could claim statutory tax reliefs that were available for investments in businesses “trading with a view to a profit”.
The claimants say Eclipse had no real involvement in the distribution of the Disney films, meaning there was no real prospect of generating a return for the investors. Instead, most of the investors’ money was paid in fees to Disney, Future, HSBC and their advisers. They allege that had they been told the truth about risks of investing in Eclipse, they would not have invested.
Following detailed investigations by HMRC and litigation before the Tax Tribunal, it was found that the scheme was not “trading with a view to a profit” and, in fact, amounted to little more than a series of circular and self-cancelling transactions. As a consequence, the claimants’ investments were worthless and investors suffered losses, which include substantial payments to HMRC.
Our Tax Litigation and Resolution team
We advise high net worth individuals, owner-managed businesses, trusts and large corporates on tax disputes with HMRC, from enquiry stage through to appeals before the tax tribunals and courts. Our team also advises on commercial disputes arising out of tax issues, including claims against professional advisers in relation to negligent tax advice and financial institutions involved in structured planning.
Stewarts previously acted in the Ingenious Litigation for over 240 investors in a £100m claim against Ingenious Media, a British media investment group whose film/video game partnerships have been branded as tax avoidance schemes by HMRC. The case was listed in The Lawyer’s Top 20 cases of 2018 and 2022.
You can find further information regarding our expertise, experience and team on our Tax Litigation and Resolution page.
If you require assistance from our team, please contact us.
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