Film investment tax dispute hits profits for Trespass firm
The firm behind outdoor clothing brand Trespass slipped into the red last year after being caught up in a tax dispute over film industry investments.
Jacobs & Turner invested in films such as Avatar and Life of Pi via schemes run by film financing firm Ingenious Media.
However HMRC later argued the schemes were aimed largely at tax avoidance rather than investing in films.
It led to a long-running legal battle between dozens of investors and HMRC.
The issue has yet to be resolved in the courts.
As a result, Glasgow-based Jacobs & Turner set aside more than £3.2m last year to cover any tax liability and related interest.
This led to the company booking an overall net loss in 2015 of £1.4m, despite sales increasing by £1.7m to £87.9m.
In its annual results posted at Companies House, Jacobs & Turner said net profit was "impacted by a one-off exceptional provision for tax which may become payable on the group's film investment".
It added: "The directors invested in the Ingenious film schemes to support the continued production of UK films.
"A number of the group's film investments have been both commercial and cinematographic successes such as Avatar and Life of Pi.
"However, the political environment has changed significantly since undertaking these investments and HMRC is challenging the tax benefits which accompanied the investments.
"Given the current climate the directors have decided to provide in full for any tax and related interest which may become due as a result of the Ingenious film investments."
In its accounts statement, Jacobs & Turner said it opened new stores in a number of European countries during the financial year.
It also reported "good growth" in online sales, having invested in its website and IT infrastructure.