In order to support the British film industry, successive
governments have introduced special rules aimed at encouraging the
production of British films. These rules work by allowing a person
who has produced or acquired a qualifying film to claim or elect to
deduct the expenditure he has incurred more quickly than he would
otherwise be able to under the income matching (
BIM56215) and cost recovery (
BIM56230) rules.
For films that are qualifying British films for the purposes
of the Taxes Acts (see
BIM56105) a number of alternative
treatments to the income matching or cost recovery methods are
available for writing off expenditure incurred on the production or
acquisition of the master version of a film.
A person incurring expenditure on a qualifying film can:
In practice, the reliefs for qualifying films are rarely
accessed directly by film producers themselves, but are usually
claimed by financial intermediaries (for example, banks or
partnerships of wealthy individuals) using sale and lease back or
production and licence schemes (
BIM56400).
The involvement of these third party financiers has been
accompanied by a great many complex and artificial tax avoidance
schemes based on the tax reliefs for qualifying British films. This
has required anti-avoidance legislation in FA02, FA04 and FA05. In
particular, legislation has been enacted to prevent:
