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Last Updated: Thursday, 12 February, 2004, 10:31 GMT
UK movie industry 'in jeopardy'
Johnny Depp
Johnny Depp is shooting The Libertine in the UK
Legislation designed to stamp out income tax avoidance could devastate the UK's healthy film industry, a leading Hollywood producer has warned.

The Inland Revenue has shut a loophole which offered tax relief to film investors, fearing it was being abused.

Executive producer Russ Smith said his current production The Libertine, starring Johnny Depp, could be moved out of the UK or closed down in weeks.

"Britain will become a no-go area for film-makers," he said.

It is claimed the change in policy could immediately remove 30% of the funding which is assumed to be available to back film productions.

The UK film industry is currently thriving, with more than 1bn spent on films made in the country in 2003, partly credited to the tax breaks offered to overseas investors.

'Moment's notice'

Mr Smith, whose credits include of Mice and Men and Ripley's Game, said he could not believe there had been no warning about the change, which was announced on the Inland Revenue website.

"In America tax legislation is introduced at the end of the financial year. I've never heard of anywhere where it is brought in without even a moment's notice," he said.

"God knows what will be said at the forthcoming Bafta awards. Everyone will be talking about the demise of the British film industry."

He added that he was now looking to move production of The Libertine, about the life of 17th Century poet the Earl of Rochester, to a low-cost location in east Europe.

But he also fears the whole project could face being closed down.

The tax change was brought in to address tax avoidance schemes the government believed were being manipulated and undermined their true purpose.

Job losses

Paymaster General Dawn Primarolo said: "These schemes exploit tax reliefs that are intended for people who risk their own money in running genuine businesses."

Terrance Potter, chief executive of Cardiff-based production company Aquarius, only discovered the changes after checking the Inland Revenue website.

"What these changes will mean is that a number of really high-profile productions, which are about to start up in the UK, will be put in jeopardy," said Mr Potter.

He added he was sure it would result in the collapse of some production companies and the loss of hundreds of jobs.

"The fact that this was brought in with immediate effect is stunning. If we had had some sort of notice we could have made plans. But nobody could have expected this," he said.

A spokesman for the Inland Revenue said: "I don't know what to say about these criticisms. But the tax is well thought out."

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