The Pre-Budget Statement
Originally sent: December 10, 2004I expect you have all read general reviews of the Pre-Budget Statement by now, so I do not intend to dwell on such excitements as the effective ?20 a year reduction in Income Tax for a 40% taxpayer or the very generous cash payment of ?50 next year ? if you are over 70, that is!
Instead I thought I should quickly review the developments in Film Partnership anti-avoidance measures.
Those of us who have any involvement in Film Partnerships were expecting further anti-avoidance announcements, and we were not disappointed.
The main change, and one which many of us saw coming, is the prevention of what Inland Revenue calls ?double dipping?. In other words, the tax relief should only be claimed once for any particular film. If the relief is obtained by a production partnership, it cannot then be obtained again by a sale and leaseback partnership.
Will there be any sale and leaseback partnerships exclusively investing in films that have not obtained and do not intend to obtain any tax relief in a production partnership? Maybe, but I suspect this will greatly narrow the supply of new sale and leaseback opportunities, if not cut it off entirely.
The good news is that the new measure does not apply where all the costs of producing the film have already been incurred, where there are unconditional contracts in place covering all the costs, or where the film is already in production. You should therefore check with your providers whether the Partnerships in which you or your clients are interested meet these criteria.
There are also prohibitions on deferring the tax more than 15 years, exiting through corporate group structures, and claiming tax relief on grossed up investments where the loans are not full recourse to the investor.
Adviser Breakthrough Training Solutions Ltd. takes no responsibility for loss occasioned by any person acting or refraining from action, or in consequence of any other person acting or refraining from action, as a result of the material in this article.
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