Film industry tax relief questioned

Harry Potter: A remarkable UK film successes

The government is under pressure to re-examine the tax breaks given film makers - the day after it ruled out giving the makers of "high-value" TV drama similar tax relief.

Critics have said that the scheme to encourage film makers, by giving 100% tax relief to investors backing film projects is being abused - and glutting the market with commercial duds.

We are fuelling an industry to produce a product [for] the benefit of the investors

Alexander Walker

Currently only one of 20 British films makes money, but the tax breaks on offer have led to a scramble for UK films to invest in.

The BBC's Andrew Verity said: "Putting money into film making has become by far the most effective way of keeping money from the tax man.

"A growing number of high earners is searching for films to invest in."

Now critics say the tax breaks are not working as intended - and should be reformed.

Primarolo: Cost of tax relief has "risen hugely"

"We are fuelling an industry to produce a product not going to the benefit of the public, but the benefit of the investors - and I don't think it's healthy," Evening Standard film critic Alexander Walker told BBC News.

On Thursday MPs will debate new clauses in the Finance Bill which could lead to a tighter definition of what film projects justify.

Under the new rules "high-value" TV drama will no longer be eligible tax relief.

Cost

The Paymaster General, Dawn Primarolo said on Wednesday that the tax relief was provided specifically for the film industry - not drama, game shows, soaps or any of the other productions that had made claims.

"The cost and the use made of this relief - even though all in the industry knew it was not intended - over last year and this year rose hugely in terms of the cost to the Exchequer," said Ms Primarolo, during the Budget-enacting Finance Bill's report stage.

Ms Primarolo added that evidence showed TV production companies were not subject to the same structural problems and financial risks as film makers.

But she said the Government was offering some transitional relief to TV companies, in that drama series costing more than £500,000 an hour to make would be protected if shooting had begun before the end of last month.