brief advice on ftr & eis tax issues

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suzanne wrote:

Dear Peter,

I invested £500 in Michael’s resignation and was wondering whether you could tell me a bit more about the tax incentive (UK Film Tax relief). Sorry, but I don’t quite understand how these things work. Will I need to fill out some form for tax relief once you are certified by the UK Film Council? Any advice on this will be greatly appreciated.

Cheers,
Suzanne

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Dear Suzanne

It is very nice hearing from you and apologies that you found it difficult to reach me.

There are two parts to the answer – firstly on Film Tax Relief (FTR) and secondly on the Enterprise Investment Scheme (EIS).

- Film Tax Relief (FTR) – Speaking to HMRC it looks like the FTR is a changed beastie from what it used to be – the 2006 Finance Act has changed it so this works as a credit that the company gets against corporation tax (ie the tax the company has to pay to the Inland Revenue on its Profits). This therefore means by claiming this relief the company now has more retained profit which is can distribute to the shareholders as greater dividends. So on FTR there is no further forms that you need to complete.

- Enterprise Investment Scheme (EIS) – we are in the process of registering the company with the Inland Revenue for this scheme. Assuming that the Inland Revenue accepts our registration (and we know of no reason why it shouldn’t!!), then there are a number of tax incentives available to the investor depending on his/her personal circumstances. Could I suggest that the best thing to do first is to look at this page on the Inland Revenue’s website http://www.hmrc.gov.uk/eis/part1/1-2.htm.

With the EIS scheme we will send you as soon as we can a form called an EIS3 – you then use this with your normal annual Self Assessment Return to the Inland Revenue – how exactly you do this depends again on your personal cirumstances – further details are available on this page on the Inland Revenue’s website http://www.hmrc.gov.uk/eis/part1/1-4.htm

I hope that this helps with your question Suzanne – if anything is still unclear then please do revert to me again.

Best Regards

Peter Reed