British Film Institute Defends U.K. Film Tax Credits as 'Stable and Legitimate'

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Adrian Wootton

The organization reassures filmmakers amid media reports about tax avoidance schemes that the government is looking to shut down.

LONDON – The British Film Institute has sent out a message to overseas and local filmmakers alike that the U.K. movie tax credit system remains safe, stable and legitimate.

The move is a reaction to a flurry of media reports about the legitimacy of certain types of film investment plans being used to mitigate investors' tax liabilities.

British comedian Jimmy Carr hit the headlines recently for using one such tax avoidance vehicle and apologized for his "terrible error of judgment."

But the BFI has aimed to make it clear to the media, movie industry and investors alike that such tax avoiding financial tools are separate from Government-approved mechanisms such as the movie tax relifef and the Enterprise Investment Scheme.

“It is vital we distinguish between Government-approved tax reliefs, such as the Film Tax Relief and the Enterprise Investment Scheme on the one hand, and tax schemes which have nothing to do with those statutory reliefs and just happen to use film as a vehicle for minimising the tax contributions of individuals, on the other,” BFI chief executive Amanda Nevill said.

Nevill is also keen to make sure the delineation between the kinds of movie tax breaks is made crystal clear after The Times of London reported that more than £5 billion ($7.9 billion) of U.K. tax revenue was at risk from wealthy individuals who invest money into film finance schemes that help them avoid tax payments.

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Film London and the British Film Commission chief executive Adrian Wootton, a man whose many tasks include attracting productions to shoot here, also played up the important differences.

“It is vital to underline the fundamental difference between those schemes that fall outside of any specific legislative framework and the UK Film Tax Relief which was specifically established by the Government to help film-makers finance culturally British films, as well as other statutory interventions such as the Enterprise Investment Scheme (EIS) which are designed to enable investors to reduce risk. The British Government has clearly stated its support of both the UK Film Tax Relief and the Enterprise Investment Scheme, both of which have also received European State Aid approval, and there should be absolutely no concern from international producers on this matter,” Wootton said.

Some observers have pointed out that the same companies whose funds were highlighted by the Times are also heavily involved in the fast burgeoning EIS market for film.

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However, the BFI is making it very clear that Film Tax Relief, introduced in 2007, is both fully approved by the Revenue and Customs service and "crucial" to the well-being of the UK film industry.

"It is a critical factor in attracting around £1 billion ($1.56 billion) in inward investment into British film per annum, at an estimated annual cost to the Treasury of around £140 million ($219.5 million)" the BFI’s statement reads. "The tax relief also supports UK film production as a whole, such that the industry annually makes a contribution of £3.3 billion ($5.2 billion) to U.K. GDP, supports 62,000 jobs and directly contributes over £440 million ($689.7 million) in tax revenues.”