UK Minister Wants Film Council To Act As Tax Scheme Spy

by Robert Lee, Tax-News.com, London

27 May 2004

The UK’s Secretary of State for Culture, Media and Sport Tessa Jowell, has told the Independent newspaper that she wants the UK Film Council to report to the government any film financing schemes suspected of exploiting tax loopholes.

“I'm asking the Film Council to be my eyes and ears...and to alert me to any new scams. The excellent work of hundreds of smaller producers is being ruined by a few rogues," Ms Jowell explained to the paper.

The news comes after the Inland Revenue in February changed without notice tax rules used by filmmakers to offset the costs of production, which the government considered were being exploited illegitimately.

"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 Paymaster General Dawn Primarolo at the time.

The manner of government’s actions, carried out without consultation, attracted fierce criticism from the industry, and threatened to disrupt dozens of films under production in the UK, including some relatively high budget features.

However, Jowell defended the government’s approach to the issue, telling the Independent that the schemes were "a scam that was skating on the edge of what was permissible.”

“I have no regrets about the way it was done. I hope the effect will be salutary," she added.

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