Recent Tax Change Could Ruin Several UK Film Productions

by Robert Lee, Tax-News.com, London

13 February 2004

It has emerged that new tax rules announced by UK Paymaster General, Dawn Primarolo on Tuesday, designed to prevent manipulation of trading losses for tax purposes, could jeopardise up to twenty films currently in production in the country.

"These schemes exploit tax reliefs that are intended for people who risk their own money in running genuine businesses, but the schemes manipulate tax relief to create claims for losses in excess of the capital at risk,” explained Primarolo. However, the government has denied the new legislation was aimed specifically at the film industry.

Nevertheless, Daniel Taylor of Grosvenor Park, a leading provider of tax based film finance to producers around the world, stated in a Financial Times report that the government’s latest move was “literally a death blow” to many film projects which are currently being financed by such partnerships.

Taylor predicted that many small independent film-makers will be sent to the wall as a result of losing up to a third of their financing budgets provided through partnership arrangements.

The Inland Revenue meanwhile, insists that the new rules were designed to prevent individuals from "drawing up complex scams to take advantage of the relief and avoid tax".

"This legislation will not prevent film-makers benefiting from film tax relief and it will not hurt legitimate film-makers," added the Revenue.

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