Nigel Barklem invested £200,000 into Film 2K on 9 September 1999, a film partnership tax scheme. After Film 2K filed partnership tax returns for 2000 and 2001, the scheme identified large taxable losses, splitting them between its partners in accordance with sections 12AA, 12AB Taxes Management Act 1970 (TMA).

Film 2K filed for losses for tax purposes for £12,207,810 and £1,015,669, identifying all partners’ losses in them.

Barklem claimed tax relief for his share of the losses in his self-assessment tax return for the same years, amounting to £994,995.

HMRC opened enquiries into the tax returns in 2001 and 2003, deciding that the relief did not apply to Barklem. Closure notices were then issued on 25 November 2019 under s28 of the TMA.