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HMRC internal manual

Film Production Company Manual

Avoidance and disclosure: avoidance - introduction

The tax relief previously available for production or acquisition of British films was subject to regular abuse by those seeking a means to avoid tax. The tax regime for films introduced by FA06, including the Film Tax Relief (FTR) itself, has been designed to ensure that it does not suffer from similar abuse in the future.


The principal way in which the legislation seeks to prevent avoidance is by targeting relief exclusively at film production companies (FPCs). This means it is not available to those whose involvement in film making is confined to supplying or arranging finance.

This is a fundamental difference from the previous film reliefs which were available on the costs of acquiring films as well as on the costs of producing them and which could be claimed by individuals as well as companies. In practice, this enabled individuals and financial intermediaries to use the reliefs to shelter their general income and gains from tax by means of complex sale and leaseback arrangements.

Making the new regime in general, and FTR in particular, available only to FPCs brings an end to sale and leaseback deals in the film industry (see FPC90100 setting out the transitional provisions which phase out relief for film acquisition).