Eric Nicoli, the former chief executive of music group EMI, invested in a film financing scheme believing it was “virtually risk free”, he told a court hearing today.

Mr Nicoli, who is one of 75 individuals who lost money when the scheme failed, said he was so confident because the investment had been recommended by his financial adviser and endorsed by two tax experts, Baker Tilly, the accountants, and Adrian Shipwright, a barrister.

Giving evidence on behalf of the group of 75 individuals who are suing Baker Tilly and Mr Shipwright, of Pump Court Tax Chambers, for £23 million, Mr Nicoli said he regarded a minimum 40 per cent return on the film scheme as a “definite outcome”.

Mr Nicoli was called as the first witness in a month-long trial in which the investor group, which also includes Guy Hands, head of the private equity firm that recently acquired EMI, is suing Baker Tilly and Mr Shipwright for giving negligent tax advice.

The film investment scheme, put together by Baker Tilly and marketed by a separate firm of financial advisers, was designed to take advantage of tax breaks available to investors in the UK film industry.

After investors had ploughed millions of pounds into the scheme, it was later vetoed by Revenue and Customs, resulting in heavy losses.

The investors say they only signed up because the scheme had been approved by the accountants and Mr Shipwright. They now argue they deserve compensation because the expert advice they relied on turned out to be incorrect.

Baker Tilly and Mr Shipwright deny negligence. In cross-examination, their lawyer asked Mr Nicoli how he knew the scheme had received the experts’ endorsement.

Mr Nicoli said he had had been told by his financial adviser and conceded that he had not read the relevant advice given by either Baker Tilly or Mr Shipwright.

Ian Mill, QC, for Baker Tilly and Mr Shipwright, asked Mr Nicoli whether he had read the various disclaimers in the marketing materials for the film scheme, including one that stated the tax position on which the scheme relied was not confirmed with HMRC.

Mr Nicoli said he had read the disclaimer but nevertheless relied on the advice of Baker Tilly and Mr Shipwright.

None of the parties involved would comment.

The case continues.

Explore Law

• Corporate Law

• Public Law

• Columnists

• Law Panel

• Student Law

• Law Reports

Times Recommends

• Future Stars of the Bar 2008
• Lawyer of the Week: Julie Morris
• Charging suspects - why it's a job for prosecutors