Magazine article Screen International

EIS Backing for Films in UK Could Be Hampered by New Treasury Consultation

Magazine article Screen International

EIS Backing for Films in UK Could Be Hampered by New Treasury Consultation

Article excerpt

There could be a sting in the tail for British film financiers when the cap on the Enterprise Investment Scheme (EIS) is raised from £2 million to £10 million ($15.7 million) next April.

Leading representatives of the creative industries have been lobbying hard for the changes to encourage investment in their sector (reckoned to represent 7% of British GDP) in a post-credit-crunch world.

The UK film sector is now gearing up to take advantage of the EIS changes, which many have been predicting might lead to another mini-boom in British film financing. However, some industry experts are warning that film risks falling foul of the Treasury consultation on "Tax Advantaged Venture Capital Schemes."

The consultation was launched by the Treasury to improve the focus of EIS and VCT (Venture Capital Trust Schemes) to ensure that the relief was targeted at smaller high-risk companies that might otherwise struggle to raise the finances to sustain their businesses.

Eligibility rules appear to be the sticking point.

One of the key problems is that so many companies operating in the creative industries are micro-businesses employing small numbers of staff. The Treasury has been trying to target relief at what the consultation paper calls "genuine high risk capital investments."

The Government has made clear its concerns "about investment in companies which exist for a relatively short period of time during which they employ no staff, sub-contract all activities to other - often much larger - entities, and then cease activities. …

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