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Five To Be Charged For UK Film Tax Fraud

by Jason Gorringe, Tax-News.com, London

03 May 2013


Five people are to be prosecuted in connection with a UK film tax relief fraud allegedly costing the public revenue around GBP125m (USD195m), according to the Crown Prosecution Service (CPS).

The CPS has confirmed that following an investigation by HM Revenue & Customs (HMRC), charges have been authorized against the five individuals for conspiracy to cheat the public revenue and conspiracy to defraud and falsify documents.

These latest fraud allegations come only a month after another five individuals were convicted for cheating the public revenue by attempting to claim back VAT and film tax credits for a film that was never made.

CPS deputy head of fraud, Andrew Penhale, said: "It is alleged that, between 1 January 2002 and 11 July 2011, a tax relief that allows investors in the British film industry to offset losses against other tax liabilities was abused and dishonestly marketed in order to cheat the public revenue."

Film Tax Relief was introduced in the UK in 2007, aimed at supporting film production companies in offsetting expenses occurred when producing British films intended for theatrical release.

To qualify for this relief, films must be classed as British under an agreed production treaty or by passing a cultural test. Additionally, a minimum of 25% of total production costs must relate to activities in the UK.

Tax relief is vital to the UK film industry according to a 2011 report "The Economic Impact of the UK Film Industry in 2011," which claims the UK film industry contributes more than GBP4.6bn to the country's GDP and over GBP1.36bn to the Exchequer.

The five defendants are to appear before Birmingham Magistrates' Court on June 18, 2013.

TAGS: investment | film finance | United Kingdom | enforcement | HM Revenue and Customs (HMRC) | HM Revenue and Customs (HMRC) | alternative investment

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