BIM56130 - Film and audio products: qualifying films: films intended for theatrical release: examples
FA02/S99 and ITTOIA/S144
Example 1
An independent film producer commences production of a
feature length drama with the intention of seeking a distribution
deal to have the film shown at the commercial cinema. Despite her
best efforts, after completing the film, she is unable to find a
distributor for the film but is instead offered a deal by a cable
television company which is prepared to show the film on its
channels. The film was completed on 26 November 2004 and was
subsequently certified as a qualifying British film by the
Department of Culture, Media and Sport (DCMS) (
BIM56105).
When the film was completed it was the clear intention of the
film producer to seek theatrical release (see
BIM56115) and to obtain a significant
proportion of the film’s income from that source. Although
her plans were thwarted by the inability to obtain a distribution
contract that does not affect the status of the film for tax
purposes. The film will be a qualifying film.
Example 2
A television company commissions a feature length drama with
the intention of showing the film on its own channel. Before the
film is completed the company concludes that the finished product
will be of a type that may be successful in the commercial cinema
and a distributor for the film is found. The film is released in
the commercial cinema, the television showing being deferred for a
year. The film is certified as a qualifying British film by DCMS.
Although the original intention for this film was not to seek
cinematic release, that intention had changed by the time the film
was completed, so the film will be a qualifying film.
Example 3
A television company commissions a feature length drama with
the intention of showing the film on its own channel. One year
after the film has been shown on television the company seeks to
sell the TV rights to a number of overseas broadcasters. Take up is
not very good but the company is offered a distribution deal for
cinema release in one country.
The intention of the company up to and after the date on
which the film was completed was to exploit the film on television.
The subsequent distribution contract does not change that original
intention. Even if the film obtains a certificate from DCMS it will
not be a qualifying film for tax purposes.
Example 4
A television company regularly hires a cinema near its
studios for the purpose of screening each episode of a popular soap
opera on the morning of its first television broadcast. The
episodes are submitted to DCMS for certification. The company
claims that as the episodes are always screened first in a cinema
the conditions for being a qualifying film are met.
The reason for the screening is not because the company
intends to obtain a significant proportion of the income from that
source. It is always intended that exploitation of the programme
will be on television. The programmes will not be qualifying films.
Example 5
A television company commissions a film with the intention of
screening it on UK television but seeking theatrical release in
territories outside the UK.
The fact that the film is not intended for release in the UK
will not cause the claim to fail if a genuine intention to release
the film to the commercial cinema in other territories can be
established. Evidence would be required that such an arrangement
could be expected to generate a significant proportion of the
film’s income from the theatrical release.
Commencement and transitional rules
Example 6
A television drama programme with a running time of 45
minutes and production expenditure of £250,000 was completed
on 28 February 2002. An application for certification was received
by DCMS on 1 May 2002; the programme was subsequently certified as
a qualifying British film.
As the film was completed between 1 January and 16 April 2002
an intention for theatrical release is not required (
BIM56110). The film is a qualifying film
for tax purposes.
Example 7
A television drama programme with a running time of 45
minutes and production expenditure of £250,000 was completed
on 30 November 2001. An application for certification was received
by DCMS on 31 March 2002; the programme was subsequently certified
as a qualifying British film.
Although the film was completed before 1 January 2002 an
application for certification was with DCMS before 17 April 2002.
As a result an intention for theatrical release is not required.
The film is a qualifying film for tax purposes.
Example 8
A television drama programme with a running time of 45
minutes and production expenditure of £250,000 was completed
on 30 November 2001. An application for certification was received
by DCMS on 31 May 2002; the programme was subsequently certified as
a qualifying British film.
The film was completed before 1 January 2002 and the
application for certification was not received by DCMS until after
17 April 2002. The film was not made with the intention of seeking
release at the commercial cinema. The result is that the provisions
in FA02/S99 apply to prevent the film from qualifying for relief.
Example 9
A terrestrial television broadcaster commissioned a drama
programme on 31 March 2002. Principal photography commenced on 2
May 2002. The programme was completed on 31 August 2002 with a
running time of 50 minutes. Production expenditure was
£450,000. The film was certified as a qualifying British film
by DCMS on 31 January 2003.
The transitional rules will apply. The film was commissioned
before 17 April 2002 and principal photography commenced before 30
June 2002. The average production expenditure per hour of running
time is more than £500,000 (£450,000 x (60 / 50) =
£540,000) and the programme is a drama (
BIM56125). The film is a qualifying film
for tax purposes.
