TaxCorporate TaxTV giants blamed for end to film tax breaks

TV giants blamed for end to film tax breaks

Production companies have blamed the BBC and ITV for the government's decision to remove film tax breaks, which has endangered the UK film industry and affected dozens of production companies.

William Sargent, co-chief executive of Framestore CFC, which produced the BBC’s Walking with Dinosaurs, said the breaks were lost because ‘soap operas were being categorised as films’ by certain companies.

And according to the Producers’ Alliance for Cinema and Television, the television giants processed several regular series and soap operas – such as Holby City and Emmerdale – using the wide definition of ‘film’ for the tax breaks. But the relief was originally intended for ‘theatrical films’ like Band of Brothers.

A spokesman from PACT said the BBC and ITV used a loophole in the law to exploit the tax exemption which ended up costing the government three times as much as expected. The removed tax break affected about 50 production companies, one of which has gone bust.

He told AccountancyAge.com: ‘We’re disgusted. [The tax incentive] was a great way of raising working capital, helping producers retain intellectual property in their businesses.’

The removal has also affected business coming in from overseas. The Framestore chief said the lost tax break would affect about 20% of its revenue, which comes from large US television networks.

He said: ‘Ending the tax breaks removes an important incentive for choosing the UK to make a production. They were an important reason American companies chose to use the UK.’

Framestore made £25m in the current year from TV productions. Sargent said part of the financing structure of many of these programmes is tax breaks.

In response the BBC said: ‘We have a duty to maximise the benefit of all available concessions for the taxpayer.’ It added it was supporting the British Screen Advisory Council’s lobby against the proposed changes.

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