Film schemes: The taxman strikes back

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In the 1968 film The Producers a washed-up theatrical producer and his neurotic accountant deliberately try to put on a musical that will close as quickly as possible, writes Nick Huber.

They deliberately raise more money than they need for the production and because backers will not expect any money back from a flop, the producers hope to run with the surplus cash.

But their plans go awry when their musical, called 'Springtime for Hitler' (see above), written by an escaped Nazi, is a hit.

Fast forward four decades and real-life get-rich schemes in film are still making headlines...

Continued...

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Comments

Film schemes    1 thanks

adambl | | Permalink

 

All responsible tax advisers would agree that some of the film schemes were too aggressive but I feel that Nick you're misleading readers when saying "for every £20 higher-rate taxpayers invest they can get £40 from the taxman". 

 

All of the schemes I have seen (most of which were originally accepted by HMRC) are nothing more than a cash-flow advantage to the investor because they have to repay the £40 over the lifetime of the scheme.

FILM INVESTMENT

RobertG | | Permalink

All of these `schemes` which are nothing more than tax avoidance plans with no commercial purpose have, quite rightly, been smashed. The British film industry is enjoying an exciting time because  those that intend to actually make a film, have a passion, and want it ro be successful. They will do so correctly, seek experienced advice and have the schemes (SEIS, EIS or a combination) pre approved by HMRC. The deluded few that try and circumvent the system to fraudulently claim VAT and or the UK film tax credit will get discovered at some point.  Projects are examined by HMRC before being approved and once underway are presented to BFI usually twice (interim and final) which examines the project as a whole and then HMRC will examine the accounting and computation of the claim again on two levels. Most film schemes are now presented by specialist firms with many projects behind them and are known to BFI and HMRC as dare I say it legitimate `players`.

With a strong project, a pedigree cast, crew and distribution in place British film investment is now a real alternative to other investments. For lower budget UK films, the SEIS gives a 50% tax break on investment amongst a raft of other benefits depending on an investors tax position.  Once 70% of that has been spent the film can move into an EIS to raise larger sums for bigger projects. 

Rob Graham, Graham Associates (International) Ltd www.graham-assoc.co.uk

stevebritgimp's picture

Liverpool    1 thanks

stevebritgimp | | Permalink

(Liverpool played Milan).

If it looks too good to be true...

Red1960 | | Permalink

I don't have a single client who doesn't regret their involvement in film partnership schemes.

The individuals who promoted these schemes so aggressively must be looking anxiously over their shoulders and towards their indemnity premiums these days because they certainly weren't looking towards their consciences at the time they were promoted.

Enough said.

Film Partnership

jonnyd | | Permalink

Couldn't agree more with comments of Red1960. My former Practice supported a leading Film Partnership Promoter based in London for a number of years. We relied heavily on the honesty of one of the Directors. Of course none of his "guarantees" came to fruition which effectively destroyed my Firms' reputation. To add to the misery this former Promoter of the Schemes has now joined a Company suing IFA's and Accountants for promoting them in the first place! How the man sleeps in his bed at night is beyond me.

FILM INVESTMENT

RobertG | | Permalink

Red has a good point - the potential PI claims to come must be horrendous for the advisers of partnerships.  But the negative impact of the partnerships has hurt many advisers and made some investors very wary.

Fortunately these are long gone now and the excitement of film investment has returned.

Caveat Emptor reigns here. Carry out due dilligence any wild claims will be just that.  Any film production company must be able to show that they can do what they say and have done it before.  But only invest for the right reasons - to make a film and make it successful

Seeing that the model of making British films works first hand on over 16 films we created our own production company which has financed 3 features in 18 months (the first to be released sits next to FLIGHT with Denzil Washington in the charts) all of which have received worldwide distribution and have become self funding to the extent that we will finance at least 4 films a year with 2 more green lit for October.

Meet the stars, visit the set, attend the premiere and be in a movie as an extra.....Who said accountancy was boring?

Best regards

Rob Graham

Graham Associates (International) Ltd www.graham-assoc.co.uk

 

 

 

 

 

 

FILM PARTNERSHIPS

jonnyd | | Permalink

Been there, done that, didn't get the T-Shirt! Have never been involved in a Film Partnership that actually declared a profit! Apparently Mr Bean's holiday which took over $250m worldwide made a loss! (According to the Promoters!)

 

Now we have another story -

RobertG | | Permalink

Now we have another story - Hollywood accounting. Where the biggest movies (on paper) make no money. No net means no distributions to participants.  I have seen the Harry Potter`s profit statement where the film took in $1billion in a weekend and still made a loss.  Hollywood A listers negotiate gross percentages as they know there is no net. Note here is never invest in big budget movies with big studios attached.  Invest in people who have made money for people and can show you the numbers.  We are attached to lower budget UK films where we control the accounting and investors have made over 300% and more importantly actually see it. That way they reinvest and so the wheel keeps turning.

Best regards

Rob Graham

Graham Associates (International) Ltd www.graham-asoc.co.uk