Cash Warning for UK Film Industry

Written by BBC News on . Posted in Finance

 

UK film investments may be slashedFilm production in the UK is quite likely to suffer because new tax rules are scaring off investors, industry figures claim. The government has effectively closed a tax loophole that allowed the rich to invest in high-risk ventures and use any losses to reduce their tax bill.

A remake of the St Trinian's film could even be scrapped because of the change, according to its financiers.

HM Revenue and Customs said it had "not targeted the film industry" and supported films with other incentives.

 

UKFC: "This is not about film, it's about tax avoidance."

 

"This is not about film, it's about tax avoidance," said a spokeswoman for the UK Film Council. "It's part of an ongoing crackdown by the government."

 

Duncan Reid, head of investment at Ingenious Media - one of the biggest players in behind-the-scenes financing in the UK - said some investors would "definitely pull out" of the film industry.

 

His company has raised money for films such as X-Men: The Last Stand and Garfield 2, but he says the new rules will mean a "large shrinkage" in available funds.

"The advantages of being able to write off losses against tax were really important for attracting investors," he said. "Film production activity in the UK will fall dramatically."

 

Ingenious Media: "Film production activity in the UK will fall dramatically."

However, some experts were disappointed that the new regime was introduced without notice.

 

"We've got funding that we won't be able to use," said Paul Brett of Prescience Film Finance, which raised money for Terry Gilliam's Tideland.

 

"A lot of UK films that were going to shoot over the next few weeks are going to fall apart," he told trade paper Screen Daily.

 

 

"It would surely have been better to have a consultation and transitional period," says John Whiting, a tax partner at accountants PricewaterhouseCoopers.

"A lot of UK films that were going to shoot over the next few weeks are going to fall apart"

 

"The chopping and changing means less confidence and that affects stability in the film industry."

 

The UK film industry recovered from a similar funding crisis in 2004 when the government closed a related tax loophole.

 

Around 40 films were affected, including The Libertine - with Johnny Depp - which hurriedly found new cash to take its film shoot to the Isle of Man.

 

Another film threatened by the changes, The Constant Gardener, went on to win an Oscar for actress Rachel Weisz.

 

Full story on BBC website

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