Experts warn UK producers over drama tax credits

A pair of top British drama executives have warned UK producers could miss out on the benefits of the incoming UK tax credits system to US rivals.

Justin Thomas-Glover and Patrick Irwin of new UK drama production finance consultancy Far Moor pointed to CBS-owned network Showtime’s decision to use the credit, which comes into play next month, to produce new series Penny Dreadful in the UK as evidence of their concerns.

They claim that without clear advice, UK producers could lose out on benefits of the system. “There are still major concerns that need to be ironed out regarding the UK TV tax credit – which are not necessarily UK friendly. [UK Chancellor] George Osborne will have missed his target if the major US studios’ are the principal beneficiaries,” said Thomas-Glover.

Far Moor noted the UK Treasury consulted with the likes of Disney and Warner Bros to draw up its strategy for the credit, and claimed “it is clear that the legislation is drafted to allow for the big US companies to bring their blockbuster projects here”.

“US productions may well take the majority of the UK’s TV tax breaks and leave British producers, unrewarded, under-crewed and struggling to qualify, without the right understanding of what the new system has on offer by the government,” added Irwin.

Far Moor also claimed

• The widely reported 25% tax credit rate would in fact only apply to 80% of a production’s ‘core spend’, meaning the maximum achievable rate is actually 20%
• To have knowledge that no major bank had yet banked tax credits through the system because there were still “hurdles to be surmounted”
• US shows currently shot in the UK such as Game of Thrones showed that “the most highly qualified crew members have been sucked up into the incoming US studio productions” and would not be available for UK productions
• That standard UK broadcaster tariffs for an hour-long drama slot of around £700,000-800,000 (US$1 million-1.2 million) would not qualify because the tax credit rate was £1 million. Producers would therefore need to make up the deficit with presales, coproduction agreements and subsidy from abroad
• That the government believes only around 50 UK prodcos will benefit from the scheme

Far Moor launched earlier this year in partnership with media law firm Lee & Thompson to advise UK production drama companies on producing for the international market, including making the most of the credit, which was met with widespread support upon its announcement last March.