A gang, who made a film solely as a £2.8m tax scam, have been convicted in the first prosecution for film tax relief fraud.
HMRC investigators found that the film, A Landscape of Lies, 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 £1.5m in VAT along with nearly £1.3m in film tax credit claims.
Gang leader Bashar Al-Issa, 34, 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 over £19m 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.
However, 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. Andrea McLean, a star of ITV's Loose Women, and the former EastEnders actor Marc Bannerman were both duped into appearing in the film.
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 as HMRC will not stand by and let that happen.
'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 could go straight to jail.'
Sentencing will take place on 25 March 2013. Confiscation proceedings are underway.