Film biz gets break in new U.K. tax laws
EmptyLONDON -- The U.K. government gave filmmakers a break Wednesday when it exempted sales and leaseback arrangements from tax crackdowns.
The move was welcomed by the U.K. Film Council, the government-backed funding body that had come under fire from the British indie film world for not ensuring such exemptions were in place after the government announced tax clampdowns last week.
Movies accessing outgoing sales and leaseback arrangements, under transitional arrangements as the new tax credit system becomes established here, are now exempted from the new restrictions.
The U.K. government's Revenue and Customs issued an amendment Wednesday to allow any losses under the outgoing Section 42 and Section 48 legislation to stand under the new rules.
Said U.K. Film Council chief executive John Woodward: "This clarification is great news and welcome reassurance for the film industry. The government has moved really fast to put an end to uncertainty that a number of films would lose their funding under sale and leaseback arrangements. Confidence is now restored across the industry."
The industry has been in turmoil here since Friday, poring over new legislation to close a tax loophole used by individuals in limited liability partnerships to offset losses against tax.
The Revenue and Customs brief to limit the trading loss threshold to £25,000 ($48,000) for partnerships involving high-net individual investors hit indie financiers here hard.
What the legislative crackdown essentially means is that high-net individuals no longer will be offered tax reductions on any losses incurred in high-risk partnerships like film financing.
Such relief has also played a role in attracting investors in partnerships acting as a vehicle for existing Section 42 and 48 arrangements.
The U.K. Film Council and Revenue and Customs separately compiled data on the number of films involved -- expected to be about 90 -- affected by the new rules.
Questions remain about how timely the Revenue's exemption has been in the fragile world of film financing. "The clarification may have come too late for some of the projects with investors pulling out so quickly," one producer said.