In the continuing farce that is UK film and TV tax subsidies, HMRC are conducting public consultations over a proposal of giving celebrities tax breaks in order to make the UK a more attractive place to invest in our economy (source: Telegraph) – the likes of Google and Amazon are to be grilled (source: Daily Mail) by MPs again over their corporation tax bills. All the while, lots of folk are going to be getting £500 underpayment demands from HMRC (source: Daily Mail).
My question is: just what the heck is Osborne andHMRC up to? Why are we favouring (foreign) entertainment industries over (foreign) technology companies when it comes to paying tax to get things made here? Why are we not providing more support to domestic, home grown companies instead? If we’re favouring one over the other – why bother with corporation tax at all in that case? I am truly baffled by this.
One thing I noticed a while back when the UK government introduced more favourable tax incentives for the film industry: it appeared that a whole bunch of new post-production and VFX companies were springing up every single day. There wasn’t a moment when I was reading Broadcast or any of the industry rags that a new VFX facility was working on a new film or TV show from a Big (multi-national) Studio.
Now that other countries are offering similar incentives, these very same companies are either being sold, merged or closed because there just isn’t enough work to go around because all the work is going abroad where there are even better tax incentives to be had. All the while the companies making the use of these carrot-and-a-stick tax incentives started using them as leverage to get even more tax relief to further increase their profit margins while declaring a roaring success of contributing to the UK economy – until they start shifting production to Eastern Europe and beyond and UK film talent then suddenly finds itself out of work, or having to migrate elsewhere.
As I say: we need to limit (foreign) entertainment tax incentives to companies and productions that have a limited annual turnover. If you exceed it, no tax incentives for you. If you fall below that limit, you get some credit. Priority needs to be given to companies and producers who are domiciled in the UK and, let’s say, have no ties to foreign investors outside of the EU.
So in other words: whatever tax credit applies to film, TV, computer games, etc. should be means tested as well as being location based (this is in order to protect each country’s own film industry – goodness knows how badly Los Angeles has suffered from tax incentives by shifting everything abroad and Canada is now beginning to feel the pain as individual territories within the country are aggressively competing against each other and BC is losing).
If I were a film producer (or studio) that regularly makes $50-100 million and over PROFIT from each of my movies – I shouldn’t be getting any tax credit at all. If I wanted to make a film here in the UK and was Hollywood-based – fine – but I shouldn’t expect to get these incentives on a plate to do so in the form of tax relief.
Less reliance on others – let’s look after our own in the first instance.