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Last Updated: Wednesday, 17 March, 2004, 17:56 GMT
Film-makers welcome Budget relief
By Tom Bishop
By BBC News Online entertainment staff

Calendar Girls
Calendar Girls was one of 2003's biggest British hits
Film-makers have welcomed the tax credit scheme introduced in the Budget to help the British film industry.

Sir Alan Parker, chairman of the UK Film Council, described it as "a significant step forward".

John McVay, head of independent film and media group Pact, said credits paid to film-makers would bring "much needed stability into the business".

But Sir Alan hoped tax relief would be extended to distribution as well as production costs.

The new tax credit will support new UK films with a budget of up to 15 million, and will be introduced after the current film tax relief system, Section 48, expires in July 2005. No time limit has been placed on the scheme.

Mr McVay said this marked the end of a "rough time" of uncertainty in the British film industry, and showed that Gordon Brown viewed the industry as a good investment.

Peter James
There has been a horrendous amount of abuse by investors who saw the film industry as a tax avoidance scheme
Peter James
Movision managing director
"What we have had in previous administrations is a stop-start policy that has interrupted our growth," Mr McVay said.

"Now it is a much safer industry to invest in, and investments can be used more effectively. We no longer feel there is a guillotine hanging over our heads."

Efficient

Peter James, managing director of production company Movision, welcomed the fact that new tax credits would be paid directly to film-makers.

"There has been a horrendous amount of abuse by investors who saw the film industry as a tax avoidance scheme," Mr James said.

"As a result there were at least 150 films made between 1997 and 2001 which investors did not even want shown at the cinema.

"Now that revenue will be invested in the British film business where it belongs."

Andy Paterson of Archer Street Films also welcomed the new tax rules. "At face value this looks like an efficient mechanism for producers," he said. "We look forward to seeing the detail."

Sir Alan Parker hoped the new credit might enable more new British films to be shown in a greater number of cinemas.

He said: "Extending the scope of the new tax credit to distribution would provide a major boost to the UK film industry, helping to ensure that many more people get the chance to see British films both at home and abroad."

Venture capitalists

Barnaby Thompson, head of Ealing Studios and co-founder of Fragile Films, agreed that support should extend beyond production costs.

"Distribution costs are a vital part of the business," he said. "We also need to find a way to encourage venture capitalists to invest in the film industry, which is a slightly different system than tax credits."

Mr Thompson said the effect of the closure of tax loopholes last year is still being felt on film production. This led to a number of films being aborted, including Tulip Fever starring Jude Law, due to have been shot at Ealing.

"I would ask the Chancellor not to forgot those films that were suddenly cut short as a result," Mr Thompson said.


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