Lights, camera, (fraud) action? HSBC succeed in Fraud Defence

High Court Rules in Favour of HSBC in Film  Tax Scheme Fraud Claim – Introduction

In the case of Upham and others v HSBC UK Bank Plc [2024] EWHC 849, the High Court ruled that HSBC was not liable for deceiving hundreds of investors in a £1.3 billion fraud claim.

The claim centered on allegations that the bank misled investors into financing a tax relief scheme for a Disney movie, which HMRC later deemed as tax avoidance.


The scheme involved investors borrowing funds to make capital contributions to the “Eclipse Partnerships,” managed by Future Films Limited and advised by HSBC.

Investors could offset the interest on these borrowings against their other income for tax purposes, known as loan interest relief.

This setup leveraged tax breaks meant to encourage investment in the British film industry.

However, for these tax deferrals to work, the Eclipse Partnerships needed to be conducting “trade.”

In April 2007, HMRC determined that the partnerships were not carrying on “trade,” disqualifying the investors from the tax relief.

Despite several appeals, the Court of Appeal upheld HMRC’s decision, resulting in the investors having to pay their tax liabilities with interest for late payment.

The Complaint

The claimants, individual investors in the Eclipse Partnerships, asserted that they invested based on a representation that the scheme’s structure was approved by tax experts Mr. Jonathan Peacock QC and DLA Piper Rudnick Gray Cary UK LLP.

They alleged this representation was false because the final scheme structure differed significantly from the one on which the legal advice was based.

They contended that HSBC, through its employee Mr. Bowman, made these false representations dishonestly and deceitfully.

The claimants further alleged that HSBC was liable as a joint tortfeasor for assisting Future Films’ deceitful conduct or as an unlawful means conspirator due to representations made by Future Films.

Alternatively, they claimed HSBC was liable for dishonest assistance alongside Future Films’ breach of trust or fiduciary duty.

The Advice Representation

The claimants relied on a representation in the Information Memorandum provided to potential investors, which stated that the partnerships’ business was structured based on tax advice from DLA and Mr. Peacock QC.

The memorandum was actively disseminated by Mr. Bowman, who also provided a note summarising the scheme.

While these representations seemed factual, the court found they were actually representations of opinion.

The judgment highlighted that comparing the actual scheme structure with the advised structure involved value judgments, making these representations opinions.

As Future Films and Mr. Bowman had reasonable grounds to believe the structure aligned with the advice, the representations were not false.

Court’s Findings

The court concluded that neither Future Films nor Mr. Bowman acted dishonestly.

Future Films was entitled to rely on the legal advice from DLA, and Mr. Bowman was not expected to independently verify the consistency of the scheme’s structure with the advice.

Consequently, the claims in deceit, joint tort, and unlawful means conspiracy failed.

Other Claims

The court also dismissed other claims, including dishonest assistance, partnership, and breach of statutory duties under the Financial Services and Markets Act 2000 (FSMA).

Additionally, it ruled that the claims were time-barred and that the claimants failed to prove their losses.


This judgment clarifies the tort of deceit in financial transactions and the responsibilities of financial institutions.

The court emphasized that claims of fraud must distinguish between representations of opinion and fact.

When defendants have reasonable grounds for believing an opinion-based representation, no claim will succeed. This underscores the need for careful analysis of alleged misrepresentations before filing a claim.

Final thoughts

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