I quickly run into a problem with the blog. Despite being initially excited about my idea to write our story down so that it can serve at the very least as a document of what has happened and what is to come, I soon realise that getting Rob to talk me through any of the details that I would like to be able to present here for anyone who is interested is not going to happen, or at least that there will be a price to be paid for it by both of us. “Can we just stop talking about this?” he says sharply when I attempt to get him to talk me through the key ideas and the fundamental structure of the business.
I feel stung and he is immediately sorry. The difference between us is that for me, getting all of the circulating thoughts and injustices and inconsistencies and downright crazy unfairness of what is happening out of my head and onto the page is a form of downloading. If it is on the page it is no longer in my head, but for Rob he simply cannot bear to spend one more minute talking about this. The biggest solace of the jail term awaiting him is that he won’t have to talk about this, or justify himself ever again.
He tries to explain it to me again. He has been dealing with this every day for over seven years as a legal battle, and for many more years prior to this when he set up the original scheme in 2003 and so running through it again with me now, in one of the ten remaining days of freedom left to him is nothing short of torture. I feel terrible. I know he is done with this. Anything that excited and interested him in the idea or in its execution has been cremated a thousand times over and hounded out of him and yet here I am wanting to rake through the ashes, so what follows is just my understanding of the facts from my position on the sidelines.
At the time the idea was simple. In 1997 Chris Smith, the then secretary for Culture Media and Sport had introduced legislation in a bid to “increase the number of films made in Britain and double the percentage of the audience watching British films”(Independant, March 1999). In short he wanted to build a British film industry that could do more than bash out the odd gritty British drama for the awards season. Smith described the scheme as “a really significant step in getting more British films made and in attracting more overseas film-makers here to use our facilities and our craftsmen and actors, who are the best in the world”.
However huge uptake of the tax breaks from all sides and abuses of the system due to the fact that it was cost effective to make even rubbish films, led to changes in the legislation, which was a great blow to those in the industry who genuinely wanted to see it thrive. The facility to use the breaks to develop projects however was still in place. Traditionally finance for film had focused around bankrolling an entire film, but what the industry really needed was an injection of funds in the initial stages of production so that producers could get out of the starting blocks and develop their projects into a state where they perhaps had cast attached or art work or any number of vital elements of their choosing that would make their particular project into an attractive proposition for subsequent investors who could then finish the film.
The other advantage to getting funding in at the beginning of the process was that it would actually benefit British producers and companies as they would be able to hold onto their rights and we could actually keep the money in the country. The “British” films that are much lauded as evidence that our native industry is thriving, like the Harry Potter franchise for example, may be shot and made in this country, but the rights to those films are owned by big American studios and so the money is all being made by? That’s right…America!
The only way to get a proper industry off the ground in this country is to empower British producers. This was the nub of the idea: Private investors looking to reduce their tax liabilities could invest in a film scheme which would provide development money to producers and the subsequent increase in the number of British films made would simultaneously inject cash into the economy. This is basic entrepreneurship. It is one of the most lucrative and important aspects of our economy in the present day. Charlie raised the money from the investors and was paid a percentage, Keith was the primary architect of the structure, and took a percentage for his role, and Rob dealt directly with the producers and ran the businesses that provided the services that would help get their projects into production and thus make the scheme profitable and ultimately self supporting. He was also paid a percentage for this role.
Working out the fine print of the above, the running of the scheme, the structuring etc was arduous work. Each stage of it had to be examined and signed off by top QC’s who understood tax law a thousand times more better than the film producers who conceived of it, and this is the point: The architects of the scheme were genuine film people, used to ducking and diving and getting things done – no film is ever made without that spirit – there are just too many people and personalities, and too much money involved for it to be anything other than a scramble past all the hurdles along the way. This scheme was complicated and was made even more complicated by the fact that in 2004 the legislation was changed so that that it could no longer operate in the way in which it had been designed, but it was conceived of and operated as a genuine business.
What is more, HMRC are more than aware of that. They agreed in court that the scheme was “trading with a view to profit” which means that they understand that it was a genuine business. The scores of producers who took the stand also confirmed that beyond all doubt. This scheme was signed off by eminent QC’s at its inception, a top film account in the business was engaged to ensure that the scene complied with tax legislation and a further tax expert verified the entire scheme and was fully prepared to evidence this at the trial, though ultimately he was not permitted to give evidence. There are documents which show where every piece of money went when it entered the scheme up til the present day. Nothing has been hidden here as there is nothing to hide. To commit fraud you have to have intent – you can’t do it by accident: You have to set out from the beginning to steal money and this simply did not happen. So why are we here, waiting for sentencing? I really wish I knew.