Accidental Prime Minister: Director, firm faces UK Tax fraud charges

Mumbai: The VRG Digital Corporation Pvt Ltd the company linked to Vijay Ratnakar Gutte, the director ‘The Accidental Prime Minister’ has come under radar for tax evasion and for allegedly indulging in “circuitous transactions” with a few domestic firms to “defraud” the British Film Institute and claim tax rebates in the United Kingdom.

According to reports published in Indian Express, VRG Digital Corporation, Bombay Casting Talent Management Pvt Ltd (BCTMPL) which is a Bohra Bros Group firm, and Horizon Outsource Solutions undertook circuitous transactions to show higher investments made in the movie by BCTMPL stated remand application filed by Directorate General of Goods and Services Tax Intelligence (DGGSTI).

These transactions, according to the remand application, were undertaken to “defraud” the British Film Institute to access the tax rebate.

The British Film Institute is the principal body for certifying as British and under the UK Creative Industry Tax Reliefs, the British government allows tax concessions up to 25 per cent for British films.

And to qualify as one, at least 10 percent of production expenditure should be spent in UK as well as the production companies should be within the UK corporation tax net.

The tax relief is available on the actual expenditure incurred in the UK or 80 per of total filmmaking expenses, whichever is lower.

The DGGSTI had arrested Vijay Gutte the director of the movie on August 2 but was later released on bail. Gutte is the son of sugar baron Ratnakar Gutte, was on the board of VRG Digital till November 2018.

When contacted, Gutte said the producers have followed necessary procedures and the tax relief’s were claimed by submitting genuine papers.

While the British Film Institute on contacting for details on tax rebates said: “Due to strict confidentiality and data protection polices, we are unable to share any information regarding projects that may or may not have applied to the BFI for Certification… Additionally, we do not hold information on the amount of tax relief projects… as this is administered directly by HMRC (Her Majesty’s Revenue and Customs),” said Colette Geraghty, senior PR Manager at the British Film Institute in an email.

Here in India, VRG Digital Corporation is alleged for making “fake invoices” involving GST of Rs 34 crore for animation and manpower services received from Horizon Outsource Solutions Pvt Ltd a company that has also come under the scanner of the DGGSTI for a GST fraud of over Rs 170 crore.

The DGGSTI said VRG Digital paid Rs 115 crore to BCTMPL between June 2017 and September 2017 through Horizon Outsource even though the actual services were provided by BCTMPL.

Gutte responding to reports on VRG Digital said: “There is no case against VRG Digital. There are no circuitous transactions. The government department misunderstood the situation and thought I was part of a racket run by Horizon Outsource Solutions involving a fraud of Rs 170 crore. In fact, I was a victim of the scam run by Horizon. I had paid Rs 34 crore to Horizon and, instead of paying the government, Horizon ran away with the money. I have filed a Rs 100 crore suit against Horizon Outsource. But I am glad the department arrested me because I believe that is how investigations in this country should be done.”

He also said that he had transferred his entire stake in VRG Digital to his sister in January 2017.

“I am a creative person and since I was busy with the shooting of The Accidental Prime Minister, I was not able to devote enough time to these companies.”

Gutters directorial debut ‘The Accidental Prime Minister’ is based on a book of the same name by Sanjaya Baru. The movie stars Anupam Kher as former PM Manmohan Singh and Akhshaye Khanna as Singh’s media advisor Baru and is slated to release on January 11.