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U.S. film festival cancels award to UK film after tax scam

LONDON (Reuters) - A U.S. film festival has withdrawn an award given to a British movie about a Gulf War veteran seeking justice after a London court jailed five people for making the movie as part of 2.8 million pound ($4.3 million) tax scam.

Tax inspectors were told that A-listers from Hollywood would be starring in a 19.6 million pound production that would be shot in Britain.

But the gang never intended to make the film "Landscape Of Lives," Southwark Crown Court in London heard on Monday.

"The real intent was to defraud the public purse of nearly 1.5 million pounds in VAT along with nearly 1.3 million in film tax credit claims," the HMRC revenue department said.

When tax inspectors started becoming suspicious, the gang tried to cover their tracks by actually making a low-budget film about a Gulf War veteran seeking justice for a murdered comrade.

Just as in this year's Oscar Best Picture winner "Argo" - in which the CIA dreams up a fake sci-fi movie, complete with screenplay, posters and advertisements as cover for a hostage-rescue mission - the low-budget production was announced in film industry magazines.

It then even went on to win a Silver Ace award at last year's Las Vegas film festival.

A spokeswoman from the festival was the award was "simply a participation award".

"The acknowledgment has since been rescinded," she told Reuters on Tuesday.

HMRC said in a statement that gang leader Bashar Al-Issa, 35, along with former Irish actress Aoife Madden, Tariq Hassan, Ian Sherwood and Osama Al Baghdady, owned Evolved Pictures.

They told their auditors that they had a budget of more than 19 million pounds, provided by a Jordanian company, to produce a blockbuster film in Britain.

"Evolved Pictures told HMRC that millions of pounds of work had been spent on the film, including paying actors and film set managers, claiming this meant a VAT repayment was due of 1.48 million pounds," the HMRC statement said.

"However, during checks, HMRC found that the work had not been done and most of the so-called suppliers and film studios had never heard of the gang.

"Furthermore, capitalizing on a scheme designed to support genuine British film makers, Evolved made fraudulent tax credit claims of 256,385 pounds, while preparing to submit a further claim of 1.03 million pounds."

"After they were arrested, the gang came up with an elaborate plan to cover their tracks and hide the fraud by shooting a film on a shoestring, called "A Landscape of Lies," featuring two television personalities."

The movie, released on DVD in 2011, included in its cast an actor from the soap opera "EastEnders", Marc Bannerman, and television presenter Andrea McLean, both of whom had no knowledge of the fraud.

Al-Issa, described as the orchestrator of the fraud, was jailed for 6-1/2 years.

Actor Madden, said to have submitted a "pack of lies" to inspectors about the project, was sentenced to four years and eight months.

Hassan and Al Baghdady received four-year jail sentences.

Sherwood, who allowed his offices to be used for the fraud, was sentenced to 3-1/2 years in jail.

(Reporting by Stephen Addison, Editing by Belinda Goldsmith)

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