BFI consultation on education policy

The BFI has announced a consultation phase for its education strategy:

From: Narena Modeste []

Sent: 11 November 2013 17:05

Subject: BFI opens consultation on new education strategy for film, TV and screen media.

Importance: High

Dear colleague

I am writing to announce the opening of the consultation phase for a comprehensive new strategy to support film, television and screen media education across the UK.  I believe that you can make a very valuable contribution to this process.

A great deal has already been achieved in film education, and there is excellent practice to be found in Scotland, Northern Ireland, Wales and England.  Furthermore, since the launch of Film Forever twelve months ago, the BFI has completed the first year of the BFI Film Academy (for aspiring young film makers) and awarded Lottery funding to FILM NATION UK (to deliver film into the education of all 5-19 year olds).  At the same time, we continue to support education through our programming, our online services, and our in-venue work at BFI Southbank.

Now is the time to bring our vision and plans up to date, to confirm the value of partnership across the sector, and to define the specific role of the BFI itself.  We also want to bring into focus the evidence we have for the importance of learning about – and through – screen media, and we will commission additional research where gaps can be identified.

I do hope that you will be able to join us in this endeavour.  You can read more about the proposal, and find key questions to answer, here:

Please note that all responses to this first phase of consultation should be received by December 13th.

I look forward to hearing from you

With best wishes


 Dr Paul Gerhardt

Director of Education

British Film Institute

BFI reviews policy on unpaid interns

This item appeared in the BECTU journal Stage Screen and Radio recently:

Stage Screen & Radio April/May 2013

 BFI reviews internships

The British Film Institute is to review its practice of hiring unpaid interns after a campaign by Intern Aware which works closely with the union.  Gus Baker of Intern Aware was contacted in February by unemployed graduate Neil Jones.  He aspires to a career in the media and had applied for a BFI internship but had had to withdraw as he could not afford to work for no pay.  He told Intern Aware that 18 people were currently unpaid interns at the publicly funded organisation and he felt this was wrong.

Baker sent a freedom of information request to the BFI about compulsory redundancies which established that after the BFI had cut 72 jobs they appeared to have been replacing some of them with unpaid interns on up to six month contracts.

Questions were asked in the House of Commons and Culture Secretary Maria Miller responded that it was departmental policy that all interns receive the minimum wage.

The BFI board of governors tabled an emergency motion at their board meeting and have now agreed to review the practice of hiring unpaid interns to do work that should be carried out by paid staff.

Intern Aware is supported by BECTU and based out of BECTU head office.

Gus Baker said: “The BFI is a publicly funded body and should therefore uphold the highest standards.  I trust that they will come to their senses and start to treat interns appropriately in accordance with the Arts Council’s official guidance.”


Film finance: the UK tax relief controversy

From Screen International today:

The UK tax debate

18 July, 2012 | By Geoffrey Macnab

Geoffrey Macnab asks why years-old UK film investment schemes are coming under attack and how investor confidence in UK film is being shaken by the allegations.

Industry opinion is sharply divided over recent allegations in the UK media about film finance and tax avoidance. While financiers are crying foul against HM Revenue and Customs, others are suggesting that the film partnership schemes were indeed abusive and deserve to be “outed” in the press.

Last month, The London Times quoted a source from HMRC as saying that it had 600 film schemes under investigation and that such “schemes are a £5 billion risk for us at least.”

Meanwhile in April, in what was described as “a landmark victory” for HMRC, a tax tribunal ruled that investors in the Eclipse Film Partners No 35 LLP scheme will not be entitled to tax relief (reportedly worth £117 million) because the scheme was concerned with tax avoidance rather than genuine trading.

The Eclipse case followed on the earlier decision by a “first tier tax tribunal” in favour of HMRC last September in a case against two film partnerships promoted by Future Capital Partners (Samarkand Film Partnership No 3 and Proteus Film Partnership No 1).

To many within the UK industry, these cases were an unwelcome reminder of the “bad old days” of sale and leaseback and Section 42 and 48 tax relief. Since then, UK Film Tax relief had been put in place and the stables had been cleaned – or so the industry thought. Amid much fanfare, Prime Minister David Cameron announced last year that this targeted tax break for the film industry would be extended until the end of 2015 – a clear sign that the film tax relief had received official blessing. The extension of the tax credit to high end TV drama, animation and video games in the March 2012 Budget was further evidence that the Government was ready to support the “creative industries” with fiscal breaks.

EU State Aid approval was given earlier this summer to the new UK EIS rules. The annual investment limit for qualifying companies under EIS can now be raised to £5 million (up from £2 million). The raise makes EIS more attractive as a vehicle for investing in film.

“Our investors perceive it (EIS) as something that is very much endorsed by HMRC. Quite clearly, HMRC are encouraging film investment to go through EIS with the tax credit,” says Nigel Thomas of producer/financier and EIS specialist Matador Pictures. “Certainly, some of our investors are refugees from some of the sketchier schemes that have been around, which honestly don’t seem to have had much benefit for the investors…the benefit seems to have accrued to the promoters, not the investors.”

On the face of it, then, the film financing landscape in 2012 seemed stable and transparent. The bad feeling between HMRC and film finance schemes was something from another time. Why, some wondered, were old controversies being raked over anew by the press?

Dave Morrison from accountants Nyman Libson Paul likens the recent skirmishing between HMRC and film financiers to what happened in Northern Ireland after the “Troubles.”

“If there was a war with the revenue (and the film industry), there was a ceasefire in 2007. There might be a few rogue groups carrying it on on both sides.”

Other film financiers strike a far less sanguine note. One prominent figure in the sale and leaseback era and still active today (speaking anonymously) suggests that HMRC has been leaking details to the media in a strategic way.

“What has been developed is a legislation by the media,” the financier suggests. “What the Revenue are doing right now is a war of attrition. They’re fighting cases that I think are very straightforward and should not be fought.” He added that, thanks to the controversy being aired so widely in the media, “investors have walked out they door. they just do not want to be involved in this sector anymore.”

The HMRC had no comment to make about the allegations it had been briefing the media but one Revenue source denied emphatically that anything had been done to compromise taxpayer confidentiality.

Another source (again commenting anonymously) was angry at the statement from the British Film Institute (BFI) distinguishing between “Government-approved tax reliefs…and tax schemes which have nothing to do with those statutory reliefs and just happen to use film as a vehicle for minimising the tax contributions of individuals.”

The attitude among some financiers is that the BFI should recognize that “actually, these outlandish tax deals most probably were legal and ultimately will be proved so.”

When financier Ingenious announced in mid July that it was initiating legal action against The Times and HMRC, the company placed a statement on its website stating its schemes had “brought much needed investment into the flagship industry of the UK’s flourishing creative sector.” They had also generated hundreds of million pounds in taxable receipts.

“A shrivelled up industry even more desperately short of risk capital,” is what observer threatens the UK will be left with if investors are “spooked” away from the film industry.

The UK is not becoming a cool place to come and make your movie. Investors are going to be attacked by the Inland Revenue, who don’t really fully understand (the sector). They (HMRC) are going to attack just because it is film.”

Whether or not the financiers are vindicated, the adverse publicity clearly isn’t doing the industry any favours.

Neil Thompson of EIS specialist Formosa Films points out that “a lot of city guys we deal with were saying they were staying away from film at the moment…because it has gone a bit toxic.”

At the same time, it is widely acknowledged that some of the film partnership schemes were indeed operating close to the bounds of legality. There are examples of a film partnership taking out a large loan to acquire distribution rights to certain films, the partnership itself buying those distribution rights and then leasing them back to the same film producer (within a very short period) for a payment spread over a 20 year period.The members of the partnership would then claim interest relief on the loans taken out to fund the purchase of the distribution rights. To the non-specialist, this certainly seems like chicanery.

“I saw one film which used a sale and leaseback, a production partnership and Section 481 in Ireland. All of those rely upon a certain amount of loss deduction attributable to investors. Does that mean that on a £5 million film, it has lost £15 million on day one (of shooting)?” one observer asks of the way more aggressive schemes operated.

Of course, all of this is ancient history. The cases that are being fought in the courts now relate to partnership schemes or the later GAAP schemes set up several years ago and that were dependent on “sideways loss relief.” (Such schemes worked by generating trading losses which high net worth individuals were able to offset against their earned income.)

Dave Morrison argues that the mature investors the film industry is targeting now are sophisticated and well informed enough not to be scared away by the recent recent press reports. “This is a golf club story that has just reached the Times,” he suggests.

Nonetheless, Morrison acknowledges that the stories in the Times and elsewhere aren’t helping investor confidence.

The hope now is that the media focus will shift away from tax deferral stories and back toward the films themselves. After all, the film tax credit is intended to deliver a benefit directly to the film producer, not to enable the so called “middlemen” to make money.

Whatever the rules that are in force, it remains inevitable that financiers will look for loopholes – and it is equally inevitable that the Revenue will seek to claw back unpaid or deferred tax.

“When you enter a climate where it is clear that Revenue and Customs have been told to get in every penny that they can, it is clear that they are going to start looking at things that depart from the straightforward, legislative relief that had been mandated,” one well-placed observer notes. “I am not going to be as simplistic as to say they (the financiers) had it coming (but) I don’t think anybody could say they are surprised that the Revenue is looking long and hard at these schemes.”

The UK tax debate | In Focus | Screen


Smith report recommendations for BFI’s role

From the Financial Times today:

Smith report maps direction for British film

By Salamander Davoudi

The British Film Institute, the UK government film agency, will have its remit broadened significantly after a policy review recommended a series of initiatives ranging from changes in funding to greater regional participation and the co-ordination of a UK-wide film festival.

The report, led by Lord Smith, the former Labour culture secretary, was aimed at identifying barriers to growth for UK film. “The changes the organisation needs to make as a consequence will have to be significant and far-reaching,” the report said.

The BFI “must take a 360 degree approach to its responsibilities”, it added.

“A Future for British Film” makes 56 recommendations, including that profits from films be returned to the production companies for reinvestment instead of the original funding bodies. The money used to be considered a loan and was expected to be paid from the film’s income. The panel singled out a special allowance for animation development.

“The aim of the panel is to empower the producer to secure more of a financial stake in its next film, this will help production businesses to control at least in part the means of exploiting their productions. This will make these firms more attractive to external investors,” it says.

Lottery funding to support film will increase from the present £27m to more than £40m by 2014.

In its discussion of “clear obstacles” to the industry, the report highlighted the varying levels of engagement in British film by UK broadcasters.

It recommended that the government initiate “immediate discussions” with the BBC, ITV, Channel 4, Channel 5 and BSkyB to agree commitments to support British film.

Should this approach prove unproductive, “the government should look at legislative solutions.”

The BBC investment of £12m in UK film each year should be increased “if possible”, the report said, adding that the number of recent British films shown on terrestrial television by the BBC and ITV as a percentage of total films broadcast was “consistently low over the last three years”.

“BSkyB’s scale and reach mean that if it were able to make even modest changes to its approach to acquiring UK films this could have a “disproportionately positive effect on the whole sector,” it said.

“We also understand that independent distributors have concerns about their access to the BSkyB pay-TV platform.

“Such issues may act as a constraint on the ability of independent distributors to invest resources in cinema releases and acquiring rights.

“As a consequence audience choice is … more limited … there is a negative effect on innovation and growth of the market for film in the UK is limited.”

The BFI should create a joint venture lottery fund to be used by partnerships between producers and distributors, the report said, and together with the National Endowment for Science, Technology and the Arts (Nesta) and Arts Council England establish a development fund for digital innovation with an eligibility criteria that is “more open” than typically associated with film funds.

It called on studios and cinema operators to find a new model for digital print fees which it said were often “considerably higher than before” and were “limiting the availability of certain titles to a broader audience”.

By the end of 2012 as many as 90 per cent of UK screens will be digital with conversion of the entire UK by mid 2013, according to data from the Cinema Exhibitors Association.

Lottery funding used to be apportioned by the now-defunct UK Film Council. The BFI, which is to hold all recouped funding in trust, subsequently took on many of its responsibilities.

The report recommended that the BFI shape proposals for the recoupment of lottery funds for development and production to provide incentives for further investment in film.

Independent British films’ share at the box office remains low at an average of 5.5 per cent between 2001 and 2010.

“People want to see British movies but the percentage actually seen by the overall audience in UK cinemas remains far too low,” noted the report.

“If we’re ever going to crack this conundrum we have to ensure that filmmakers understand and think about their audience at the same time as they strive to express their creativity.”

The nine-strong panel recommended the development of a British film brand, which could take the form of an annual British film week and a register of British film.

The BFI will help local film clubs and societies in areas of rural depravation or isolation. “There is a real concern that the Department for Education may be seeking to withdraw its support for film education,” said the report, “and we received a strong message” that that support must continue.

It recommends the government introduce legislation to make it a criminal offence to record films shown in cinemas. According to industry estimates, about 90 per cent of unlawful copies of films originate from illicit recordings.