British movie business suffering under tax regime
The British film industry is suffering as a result of the Inland Revenue's administration of the popular 100% tax relief on film investments, according to film experts.
Film financiers complain the Revenue’s refusal to return tax refunds until after the end of the tax year is gradually warping the cycle of film production and could be creating around £45m of extra costs.
Investors looking to put their money into film production as a tax shelter are becoming concerned that it takes too long to receive their refund according to Jeff Abberley, a director and accountant with financiers Future Film Group.
Many investments are now being concentrated toward the end of the financial year creating problems for producers.
‘This is a positive disincentive for investing in films early on in the year,’ he said.
Karen Clark, a senior tax manager with Baker Tilly, said the problem was ‘consistency’ across the Revenue. Some clients, she said, received their refunds within weeks while others were forced to wait until after accounts have been filed at the end of the year.
‘It’s really the luck of the draw and which Revenue tax district you happen to be dealing with.’ She said some districts were even being targeted by accountants because they appeared to be more liberal in making the refunds earlier.
Under the sale and lease back scheme investors generally form a partnership to buy a film. An immediate write-off they then claim their 100% relief and apply for a refund from the Revenue.
A spokesman for the Inland Revenue said there were ‘no plans’ to change the way the scheme is currently administered.
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