Ben Elliot, the Conservative party’s embattled co-chair, jointly owned a secret offshore film financing company that indirectly benefited from more than £120,000 of UK tax credits.

The revelation that Elliot has a British Virgin Islands-based company – which he owns with Ben Goldsmith, the brother of the Tory peer and minister Zac – will raise fresh questions for the businessman, whose courting of ultra-wealthy but controversial political donors has already provoked widespread criticism.

On Monday, the Pandora papers – the largest leak of offshore data in history, which has been shared with the Guardian and other media by the International Consortium of Investigative Journalists – helped expose how a series of substantial Conservative party funders are facing a range of allegations about their links to offshore finance.

Today, the same leak shines a light on a BVI company Elliot and Goldsmith created to fund the making of Fire in Babylon, the pair’s 2010 documentary film about the great West Indies cricket team of the 1970s and 80s.

Analysis of financial disclosures suggests the duo’s BVI company held a controlling stake in a British subsidiary that made the film. The UK company received a £600,000 loan from its BVI parent in 2008, plus £121,000 from a government scheme designed to incentivise film production in the UK between 2009 and 2011.

The film made a small loss, and without the tax credits the subsidiary would not have been able to fully repay its offshore creditors, the largest of which was Elliot’s and Goldsmith’s BVI company, which had loaned the UK business most of its funds.

While the arrangement does not appear to have breached any tax regulations or laws, it does raise questions about whether government film schemes should be helping to fund projects that are controlled in a tax haven. If Fire in Babylon had become profitable, then the structure might also have provided some tax advantages.

Elliot, a well-connected Old Etonian and the nephew of the Duchess of Cornwall, co-owns luxury concierge group Quintessentially, which has earned him a reputation as a fixer for the super-rich. He is credited with raising a record £37m for the Tories’ general election campaign in 2019.

Goldsmith, who also attended Eton, is a financier and a non-executive director at the Department for Environment, Food and Rural Affairs (Defra), where his brother is a minister.

Both Elliot and the Goldsmiths are close to Boris and Carrie Johnson. In July 2020, Elliot screened Fire in Babylon for the prime minister and his wife at their Downing Street flat, with the chancellor, Rishi Sunak, and Ben Goldsmith also present.

“I got a call saying the PM was planning to watch Fire in Babylon and would I like to come along. Ben [Elliot] was there too. They loved it,” Goldsmith said.

The film, which starred cricketing greats including Sir Vivian Richards and Michael Holding, failed to achieve commercial success.

Analysis of company filings suggests the documentary made a £70,000 loss. Without the HMRC cash rebates, it appears the UK business would not have been able to fully repay its offshore investors – the largest of which was Elliot and Goldsmith’s BVI company, E&G Productions, which had provided the £600,000 loan.

Goldsmith said a group of cricket enthusiasts had financed the film, chipping in £5,000 to £100,000 each. It is not clear if these contributions – mostly made by UK residents – were then converted into the £600,000 offshore loan from a BVI company, nor how much came from Goldsmith and Elliot.

One former HMRC tax inspector, who reviewed the structure, said: “In practice, I cannot see that the use of the BVI company by two UK residents could be anything other than tax motivated.”

Prem Sikka, emeritus professor at Essex Business School and a Labour peer, added: “With tax havens, there are two advantages: opacity and tax avoidance. There’s nothing else there.”

Elliot and Goldsmith, who were both prominently credited as “executive producers” on the film, said the project was never expected to make a profit and so the choice of the BVI was not intended to avoid taxes.

Goldsmith confirmed to the Guardian that, at the time the film was being financed and made, he was a so-called “non-dom”, meaning he did not have to pay UK tax on overseas earnings and assets, despite being a UK resident.

For non-doms, only income and capital gains generated in the UK – or funds sent back to the UK – would attract tax.

So by investing in Fire in Babylon in the form of a loan from the BVI, rather than by a direct remittance to the UK company, Goldsmith appears to have ensured his investment was tax-free.

Also, had the film proved to be a commercial success, experts said the structure could have meant that profits flowed offshore. Money from TV screening deals with foreign territories such as Australia or India, for example, could have avoided UK tax for Goldsmith.

Elliot and Goldsmith added: “A Caribbean company was used at the outset because we anticipated securing investment to make Fire in Babylon largely from investors outside the UK and specifically in that part of the world. As it turned out, more UK-based investors than we expected backed the film, although as you have spotted, some of the film’s investors were indeed in the Caribbean.”

However, Fire in Babylon appears to have only attracted two Caribbean-based investors, and an offshore finance expert challenged the idea that a BVI company would have encouraged others.

“It is no more attractive for Caribbean investors to invest in a BVI company than a Netherlands company, or a Luxembourg company,” he said. “Perhaps even the reverse, as generally there is little substance to litigate. If anything, BVI is less attractive to a Caribbean investor.”

While Elliot and Goldsmith say that the film was always unlikely to make a profit, the creators appear to have been more optimistic at the time.

The Guardian has seen the contract used by the film-makers to persuade the cricketing greats to appear in the film, without whom there would have been no documentary. It states that the players were paid a nominal fee, but also promised a share of the film’s profits in return for their participation.

A spokesperson for Elliot and Goldsmith said: “The film was made by a UK company and subject to UK taxation. All taxes have been correctly and transparently declared to the relevant authorities.”

Neither Elliot nor Goldsmith answered the Guardian’s questions about whether any loan interest was paid by the UK production company to their offshore company, nor why the pair’s names were initially kept off publicly available Companies House filings, which would have shown how they had a controlling stake in the UK production company via their BVI company.

The connection only formally emerged in 2016, when Elliot and Goldsmith were registered as “persons of significant control” of the UK firm, WIB Productions Ltd, which made the film.

They said the idea that they “might have attempted to conceal our involvement in the making or financing of Fire in Babylon is patently absurd, given our names were all over it from the start, in the credits, on the invitations, in newspaper and radio interviews and so on.”

Goldsmith added: “It is a love letter to one of the great sporting stories of all time.”