You may have heard at chit-chat networking events or on social media platforms that UK-based film start-up companies no longer qualify for SEIS; they still qualify. HM Revenue & Customs only considers substantive submissions and will decline speculative ventures. Therefore, you need to find the best advisers in SEIS/EIS film tax guidance.
We work as paid consultants in SEIS/EIS film tax guidance for film companies at projection pictures, as we know what HMRC expects for EIS advance assurance. We work jointly with accountant Philip Gambrill FCCA, co-founder of pglemon; click on the icon.
HMRC will expect to receive an Investment Memorandum that an investor will see. The pages will state what the project is about with an overview of the sector. If individual cast or crew (especially Heads of Department) are attached or will be. The pre-production commences through production (principal photography) until the post is complete, and the entire budget expenditure will be.
The company (a Special-Purpose-Vehicle) will grow and develop a slate of projects to be produced. Not just for single, one-off film production. We will need a territorial sales estimate by a sales agent or distributor to reflect the return on investment (significant to investors) once the project is delivered.
A list of a few investors by name is critical; otherwise, HMRC will consider it incomplete and reject it. If HMRC accepts the submission from the company, it should go into production in the meantime, as HMRC assessment can take weeks.
As there is no guarantee HMRC will give advanced assurance right away, HMRC may require more answers to their questions before they make a final decision.
GET SOME EQUITY
To prove the SPV is viable, source some equity from an investor or crowd-funding before applying for HMRC compliance. If you have not yet incorporated a limited company, but plan to, contact us first to avoid any pitfalls from the start.
Be aware if you apply for both EIS and SEIS, of the capital raised under SEIS, production must spend at least 70% before any money is raised under the EIS scheme. Once the company is ‘Advanced Assured’ by HMRC, the company is more attractive to High Net Worth or Sophisticated Investors. They could receive tax breaks on shares, which must remain with the company for a minimum of 3 years for shares to qualify.
UK FILM TAX REBATE
For all British qualifying films of any budget level, the film company can claim a payable cash rebate of up to 25% on UK qualifying expenditure. HMRC caps the Tax Relief at 80% of the core expenditure, i.e. even if you have 100% of the UK qualifying expenditure, the tax relief is only payable on up to 80%.
The film must be intended for theatrical release. There is no limit on the film’s budget or the amount of relief payable within the 80% cap. Go to the British Film Commission website page for more guidance.