BFI statement on press reports concerning UK tax relief

There have been a number of articles in the press recently – including in The Times – concerning certain types of film investment schemes which allegedly offer opportunities for mitigation of investors’ tax liabilities. The BFI cannot comment on these schemes, but in a letter to the Editor of The Times in response to the article, the BFI has sought to underline the fundamental difference between the statutory framework specifically established by the Government to help filmmakers finance culturally British films for the benefit of audiences, as well as other statutory interventions such as the Enterprise Investment Scheme (EIS) which are designed to enable investors to reduce risk, and those schemes that fall outside of any such specific legislative framework.

The Film Tax Relief was created and is fully approved by HMRC and that has been in existence since 2007. It was expressly designed to minimise the possibility of tax avoidance and has been very successful. In fact it has been so successful that the Government is using it as a template for the extension of statutory reliefs to animation, high-end TV production and the video games industry. The tax relief is there to directly help film production companies and to promote the production of culturally British films which can be enjoyed by audiences everywhere. It is a critical factor in attracting around £1 billion in inward investment into British film per annum, at an estimated annual cost to the Treasury of around £140 million. The tax relief also supports UK film production as a whole, such that the industry annually makes a contribution of £3.3 billion to UK GDP, supports 62,000 jobs and directly contributes over £440 million in tax revenues.

A cultural test has been established to ensure this support is only available to British films which meet certain specific criteria which are designed to maximise the benefits to audiences. These schemes have been fully approved by the European Commission under their state aid rules.

In addition to the UK tax relief for film there are other statutory venture capital schemes such as EIS that are of benefit to filmmakers and that allow individuals to invest in film and receive personal tax relief on their investments.

Both the statutory tax relief for film and EIS should be seen as entirely separate and distinct from other investor tax schemes that are intended to minimise tax payments by individuals.