Film tax avoidance schemes get the cut

Paymaster general Dawn Primarolo

New legislation aimed at closing tax avoidance schemes that take advantage of
tax relief intended for UK film production have taken effect.

Paymaster general Dawn Primarolo, said the new laws would clamp down on
‘particularly aggressive’ attempts to exploit the current tax reliefs intended
to support the British film industry.

‘As we made clear in December’s pre-Budget Report, the government will take
swift and appropriate action to counter such abuses of the tax system. We will
continue to monitor the use of the existing tax reliefs as long as they are in
place,’ Primarolo said. 

The current scheme, which combines a film sale and leaseback partnership with
a tax advantage for investors, will be replaced by a new regime on 1 April 2006,
subject to approval by the European Commision. 

The new relief is aimed at helping small budget films, targeting exclusively
on film production companies and will not be available to investment
partnerships and other intermediaries. 

All changes will be included in the 2006 Finance Bill.

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