UK Taxman Gets Tough With Film-Makers

by Robert Lee, Tax-News.com, London

29 November 2004

The Financial Times reported last week that the Inland Revenue has accused several members of the British filmmaking industry of abusing tax reliefs designed to encourage growth in the industry.

According to the report, around twenty representatives from the film industry met with Revenue officials last Thursday and were told in no uncertain terms that they will be punished if they do not immediately cease the “exploitation” of the tax system.

In particular, the Revenue is not happy that some filmmakers are said to be stretching tax rules by “double dipping,” or claiming twice for the same expense – a practice which is not technically illegal, but one that the Revenue argues goes against the spirit of the legislation and has become ingrained in the industry.

"The government remains committed to encouraging film production in the UK through use of the reliefs in the way in which the legislation allows - but this does not extend to deliberate exploitation of those reliefs," the Inland Revenue commented.

However, industry members warn that a clampdown by the UK tax authorities on film finance will lead to confusion over the rules, and the likelihood that many production companies will take their business to other countries.

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