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John Woodward, Chief Executive Officer of the UK Film Council, has called for specific tax relief for the UK film industry after the Inland Revenue closed a loophole that allows losses incurred by partnerships to attract tax losses.
The announcement, made on 10 February, has been met with dismay by the industry. Films that are currently in production using complicated financing structures will be unaffected, but others - such as The Libertine starring Johnny Depp, which is due to shoot later in February at Ealing Studios, and Tulip Fever directed by John Madden - have had their futures thrown into doubt. Producers on The Libertine are said to be looking into using a foreign location for the shoot.
According to Screendaily, producer Jeremy Thomas estimates that the new rules could result in a loss of £200m in production. Coming so soon after record-breaking figures for production in the UK prompted fresh optimism about the industry, the news is especially dispiriting. Woodward issued a statement expressing the concerns of the UK Film Council:
"The UK Film Council has consistently argued for specific and tailored tax reliefs for British films and we are now focused on the details of a replacement mechanism for Section 48 film tax relief which was outlined by the Chancellor last November. Yesterday’s announcement from the Inland Revenue clearly re-emphasises the need for film specific tax relief which is part of an agreed policy to assist the film industry.
"The repercussions of the changes to the rules covering trading losses through partnerships will be felt across a range of different industries as well as film but we are scheduled to meet the Inland Revenue on Thursday 12 February to discuss the effect of the changes announced yesterday and their impact upon trading partnerships.
"Equally important, we want to protect films currently going into production where complex co-financing arrangements have been put into place in good faith by bona fide industry investors before yesterday’s changes were announced."
UPDATE: 13 February The UK Film Council has proposed relief for films whose financing had been in place by 10 February. Full story. Published on www.britfilms.com February 12, 2004
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