BusinessCompany NewsPBR: Film clampdown could cut production

PBR: Film clampdown could cut production

The chancellor, Gordon Brown, has signalled the Treasury has at last run out of patience with tax schemes exploiting film production, and introduced a raft of long-threatened anti-avoidance measures.

His clampdown is on tax relief being arranged twice (so called double-dipping) on the same production, and also the use of inflated costs and depressed income for tax relief purposes.

Some experts immediately said they expect, in the short-term, fewer films to be made in the UK as a result, while others believed there were few significant implications.

Experts also believe there remains much uncertainty for the producer community who will be left in the dark over their own tax position as a result of the changes announced.

There are also new rules to restrict tax deferral to 15 years, instead of more than 20 that some schemes use.

The double-dipping forms the chancellor’s central concern. His measures, effective from today, demand that producers elect to forego claiming tax relief and that they tell the buyers of a film of their position.

Christine Corner, head of film and media at Baker Tilly, said this will hit British producers of smaller films who often use the old measures to maximise the savings on production. She also believes the measure will deter US studios from coming to the UK to make their films.

‘There will definitely be a short-term effect,’ she said.

However, the chancellor has moved to quell the fears of film-makers who already have films underway – who will get transitional arrangements.

Change is not over for the industry film yet. One of the key tax measures, section 48, expires next year, while a new tax credit is set to be introduced for producers.

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