Tribunal confirms its decision on “intangible fixed assets” preventing HMRC from reopening the issue

In Inside Track 3 LLP and Ingenious Film Partners 2 LLP v HMRC [2025] UKFTT 986, the First tier Tribunal (FTT) has issued a further decision in the long running Ingenious film partnerships litigation and has ruled in favour of the taxpayers confirming that its earlier decision in 2017 had determined that certain rights held by the LLPs constitute intangible fixed assets, for purposes of Part 8 of the Corporation Tax Act 2009 (CTA), and HMRC could not therefore reopen that issue.

Background 

The Ingenious litigation is one of the most high value and protracted tax disputes in recent years. It centred on film investment partnerships and the availability of sideways loss relief and the tax treatment of certain film rights. The litigation encompassed appeal hearings before the FTT, the Upper Tribunal and the Court of Appeal.

In Ingenious Games LLP & Others v HMRC [2021] EWCA Civ 1180, the Court of Appeal settled many of the main issues in dispute, ruling in favour of the taxpayers on issues such as whether the LLPs were carrying on a trade and whether that trade was with a view to profit.

Following the Court of Appeal's judgment, the parties engaged in detailed negotiations in respect of the tax consequences of the ruling for Inside Track 3 LLP and Ingenious Film Partners 2 LLP (the LLPs). One outstanding question was the classification of the film rights acquired by the LLPs: were they intangible fixed assets for the purposes of Part 8 of the CTA? That classification is material for the availability of amortisation / depreciation, impairment, and related reliefs for the corporate partners.

The LLPs contended that the FTT's earlier decision had already decided that the rights were intangible fixed assets, and because HMRC did not appeal that aspect of the FTT's decision, the issue was res judicata (or at least final) and should not be reopened. HMRC argued that the FTT's earlier decision did not decide the point, and that it remained open to be argued. 

As the parties were unable to reach agreement, this discrete issue came before the FTT for determination.  

FTT's decision

The FTT concluded that its earlier decision had decided that the relevant rights were intangible fixed assets. 

In the view of the FTT, the language, structure and reasoning of its earlier decision demonstrated that classification was addressed and resolved in that appeal. As HMRC did not appeal that issue at the relevant time, HMRC was precluded from arguing it now. The failure to appeal meant HMRC could not treat the earlier decision on this issue as tentative or unfinished.

Further, the FTT concluded that interpretation of its earlier decision must rely on its textual content, it was not permissible for a party to refer to external materials such as transcripts, expert reports, or pleadings. Barring ambiguity, auxiliary material should not be used to undermine what the earlier decision said on its face. The FTT should not reopen the factual or expert evidence and arguments that were before the FTT when arriving at its earlier decision. The FTT said that what was necessary was to ascertain what was decided previously, not to re-decide it.

Comment

For HMRC and taxpayers alike, this decision reinforces the importance of paying attention at every stay of the appeal process, especially with regard to appeal deadlines in complex and multi-faceted tax litigation. Points left unappealed cannot be revisited. When appealing a decision of the tax tribunals, it is important to ensure that all issues are carefully considered and taken on appeal if necessary, in order to avoid any later ambiguity arising. In complex multi-stage disputes, tax advisers need to be alert to which points have been expressly, or implicitly, decided and which issues remain to be determined. 

This decision enhances the principle of finality and certainty in tax litigation. Once an issue is decided and unchallenged on appeal, it should no longer be vulnerable to fresh attack.

The FTT's decision can be viewed here.