“At the first stage, BSMF effectively acts as a whole administration system for the partnerships (managing, negotiating, liaising with sales agents, etc). BSMF does not act for any other retail partnerships. Producers approach BSMF literally on a daily basis. BSMF assesses film for certain criteria (e.g. in terms of budget, location, casting, sales agent, etc) before contacting the partnership(s) with recommendations, which they are able to accept or decline. No fees are charged to the partnership until a script is accepted for production…BSMF has a somewhat "supervising producer" role at this contracting stage - a process that is often longer than the production stage. At the second stage, BSMF monitors the production of the film/TV programme. A consultant, Emma Hayter, who is contracted by BSMF on a film-by-film basis, liaises with the production team to ensure everything is on track (shooting schedule, budget, quality, etc). BSMF receives information daily from the production team to enable identification of problems as they happen. Weekly cost reports are provided to enable comparisons with budget. The final stage is post-production. Once a rough cut is available, a screening is usually organised. BSMF's involvement is via Emma Hayter and Bill Allan, who assess the rough cut (e.g. for editing, dialogue, music, etc) and discuss changes as they deem fit with the director/editor. Minutes are usually taken to note significant points raised in the discussions”
“DH confirms that, in its good faith business judgement, the "minimum prices" set out in Exhibit I are accurate estimates based on the current principal casting elements and it will use its reasonable efforts to achieve such "minimum prices". Notwithstanding the above, the parties hereto acknowledge that DH has made no warranty as to the level of receipts that may be realised from the exploitation of the Film.”
“The general principles on which a claim for legitimate expectation can be sustained are well settled. Broadly, a legitimate expectation arises in circumstances where the claimant has an expectation of being treated in a particular way favourable to the claimant by the defendant public authority; the authority has caused the claimant to have that expectation by clear words or conduct; the claimant's expectation is legitimate, and it would be an unjust exercise of power for the authority to frustrate the claimant's expectation.”
“In the interests of clarity, it is important to distinguish between the evaluative exercise which the FTT has to perform, on the one hand, and the proposition that a taxpayer cannot be taxed by re-characterising what he has actually done as something else, on the other hand. Mr Furness submitted that the FTT were guilty of such a re-characterisation, but I am satisfied that they did not fall into an elementary error of this description. Their overall assessment of the commercial nature of the agreements as the payment of a lump sum in return for a series of fixed payments over 15 years (at [220] of the FTT Decision) was not a crude conclusion based on an impermissible transformation of the taxpayers’ activities into an economic equivalent, but rather a way of expressing the ultimate inference of fact which they drew from the totality of the primary facts which they had found.”
“My Lords, I do not consider that the commissioners or the courts are competent or obliged to decide whether there was a sole object or paramount intention nor to weigh fiscal intentions against non-fiscal elements. The task of the commissioners is to find the facts and to apply the law, subject to correction by the courts if they misapply the law. The facts are undisputed and the law is clear. Victory Partnership expended capital of$3 ¼ m. for the purpose of producing and exploiting a commercial film. The production and exploitation of a film is a trading activity. The expenditure of capital for the purpose of producing and exploiting a commercial film is a trading purpose. By section 41 of the Act of 1971 capital expenditure for a trading purpose generates a first year allowance. The section is not concerned with the purpose of the transaction but with the purpose of the expenditure. It is true that Victory Partnership only engaged in the film trade for the fiscal purpose of obtaining a first year allowance but that does not alter the purpose of the expenditure. The principles of Ramsay and subsequent authorities do not apply to the expenditure of$3 ¼ m. because that was real and not magical expenditure by Victory Partnership.”
“[123] … Our reasons can be stated quite briefly. The proper characterisation of the business of Eclipse 35 depends upon the totality of its activity and enterprise. Stripping the business down to its essential elements, the transactions on which Eclipse 35 was engaged had two aspects. One aspect was that a payment by Eclipse 35 of£503m would be repaid with interest over a 20-year term and would produce a profit unrelated to the success or otherwise of the exploitation of the Rights sub-licensed. That aspect had the character of an investment. Mr Aaronson did not argue to the contrary. [124] The second aspect was the possibility of Eclipse 35 obtaining a share of Contingent Receipts and the activity on the part of Eclipse 35 to secure such a share. The FTT considered that this second aspect was in real and practical terms insufficiently significant in the context of Eclipse 35’s business as a whole to lead to a proper characterisation of Eclipse 35’s business as one of trade within the meaning of the tax legislation. In our judgment, that was a conclusion which the FTT were entitled to reach and, indeed, with which we agree…. [139] … Eclipse 35 did not discharge the evidential burden of showing that it was engaged in trade in any realistic or meaningful way. The possibility of obtaining a share of Contingent Receipts did not give the business of Eclipse 35, looking at it as a whole, a trading character: having regard to the business as a whole, the right to Contingent Receipts was no more than a potential additional return on a fixed term investment.”