Law firm Stewarts Law  says it has begun a group action on behalf of 220 investors who have together invested over £100m in cash - with losses thought to exceed that figure.

The action centres on the claim that investors were ‘assured that these partnerships were entirely legitimate trading businesses seeking to make profit through financing films and video games’, the firm said.

David Pickstone, head of tax litigation at Stewarts Law, said: ‘Our clients, having invested in good faith, now face large losses as a consequence of the decision. Whilst investors have been vilified for seeking to avoid tax, the reality is that they invested and lost substantial capital having been assured that any losses would be mitigated by government sponsored tax reliefs designed specifically to encourage investment in potentially risky film projects.’

The FTT ruling in August was complex, but was agreed to be a partial victory for HMRC because it restricted the tax relief available to investors.

The investors involved in the legal action are also suing a number of banks and advisers on the grounds they failed to take ‘reasonable care’ and to spot the risks to investors.

Ingenious, UBS and Coutts have not commented on the issue. Ingenious Games LLP, Inside Track Productions LLP, Ingenious Film Partners 2 LLP v Commissioners for her Majesty’s Revenue & Customs Appeal numbers: TC/2012/6581; 2013/118; 2013/122  FTT ruling is here.