A number of schemes were created that allowed film investors to convert their tax deferral arrangement under the reliefs into a permanent tax advantage, by exiting the 15-year sale and leaseback arrangements early.
‘Various strategies have been devised to avoid payment of those liabilities,’ said David Rutnam, director in the private clients group of Big Four firm, Deloitte. ‘The Inland Revenue has introduced legislation to counter those avoidance plans.’
Rutnam added that plugging the hole would remove one barrier to extending the tax reliefs and that ‘it has got more chance than it did before the pre-Budget report’.
Approximately £1bn worth of tax is payable to the Revenue as a result of the existing film tax reliefs over a 15-year period.
The legislation means that those exiting from a sale and leaseback arrangement early will be subject to a corresponding tax charge.
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