The directors' cut
by: Louisa Gault
- telegraph.co.uk
In the opening scenes of Provoked, Aishwarya Rai, a former Miss World, exacts gruesome revenge on her abusive husband and then languishes in a cold, grey English prison. This is truly Bollywood meets Britain.
However, the tax incentives that have helped to create films like Provoked are set to expire on April 1, and it is uncertain whether the regime that is due to replace it will see investing in UK film production continue with the same verve of the past decade.
CrossOver Joint Ventures, which produced Provoked, is a subsidiary of Screen Investors and comprises a series of joint ventures that enable investors to become involved in producing feature movies that qualify for status as British films, and thus for the tax incentives.
The tax break, known as Section 48, applies to expenditure on feature film productions with budgets of £15m or below. It allows income tax relief on this expenditure at an individual's highest rate of tax to be carried back over three years. An individual's income tax paid in the current or past three tax years can be reclaimed or retained and invested in film production.
"This is a very attractive tax break for our investors and so when it ends we will have to look at alternative structures," says Rajeev Saxena of CrossOver. "Unfortunately, people who invest in films do it because of tax reasons. What was so good about [Section 48] is it is very flexible. If it is replaced with a structure that is not as good or as flexible it could impact on the industry."
These incentives have been under scrutiny for some time: the new regime is designed to stop the perceived abuse of the scheme. "The Government has focused on giving the benefit to the company that is actually making the film," says Barry Murphy, media tax expert at PWC. "In doing this they are essentially cutting back on the tradeable aspect of the tax break."
Opinion is divided about how helpful the new rules will prove: producers traditionally find it difficult to raise capital for projects. The old tax scheme helped encourage investors to put up the initial capital.
However, some are just grateful that the government is still supporting the industry.
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