UK High End Television Tax Relief. Speakers: Moses Nyachae, Saffery Champness Sarah Bing, Wiggin

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2 UK High End Television Tax Relief Speakers: Moses Nyachae, Saffery Champness Sarah Bing, Wiggin

3 Contents What qualifies? How do you qualify? The TV Production Company Cultural test What might it be worth? Calculating the value Obtaining the money Transitional Rules Use of SPVs Conclusion

4 What Qualifies? To apply to drama productions and this would include comedy programmes. However, drama for these purposes does not include advertising, discussion programmes, news or current affairs programmes, quiz show, panel shows, variety shows, or similar entertainment Episodes and Series? (Tax credit and Cultural Test) Pilots Mini-series

5 How do you qualify? Made by a TV Production Company (TVPC) Intention for Broadcast Qualify as British Pass the Cultural Points test Qualify as a co-production UK/Australia; UK/Canada; UK/France; UK/Israel; UK/New Zealand; UK/Occupied Palestinian Territories Achieve more than 25% UK core expenditure Average core expenditure not less than 1 million per slot time hour More than 30 minutes slot time

6 The TV Production Company Must make the arrangements for pre, shoot, post & delivery Co productions Work can be sub contracted Can use loan out companies Incorporate sooner rather than later

7 Production Structure Rights/ US WGA Co Finance/ Distribution Co PSA WGA Writers One Picture Licence UK TPC Sub-PSA Sub-PSA US SAG/DGA Co DGA Directors SAG Actors All personnel/ suppliers/ facilities except US guild personnel and Foreign Co hires Foreign Co local personnel/ suppliers/ facilties local incentives

8 Cultural Test Pass mark is 16 out of 31 points More inclusive than the feature film test that was introduced in 2007 Section B provides flexibility Fast turnaround time for applications Letters of Comfort

9 Cultural Test Notes Points Section A: Cultural Content A1 Set wholly/mainly in the UK (as depicted on screen) Must be in UK or the EEA 4 A2 Principal characters British nationals or residents (as depicted on screen) Must be in UK or the EEA 4 A3 Based on British subject matter or underlying material Must be in UK or the EEA 4 A4 Dialogue in the English Language (inc official regional or minority languages of the UK) 4 Total 16 Section B: Cultural Contribution B1 Production contributes to the promotion, development and enhancement of British culture 4 Total 4 Section C: Cultural Hubs Must be in UK C1 Studio and/or location shooting, visual effects or special effects 2 C2 Music recording, post production sound or post production picture 1 Total 3 Section D: Cultural Practitioners Must be British or EEA nationals/residents D1 Director * 1 D2 Scriptwriter * 1 D3 Producer * 1 D4 Composer * 1 D5 Principal actors * 1 D6 Majority of cast 1 D7 Key staff (cinematographer, production designer, costume designer, editor, sound designer, VFX supervisor, principal make up/hair) 1 D8 Majority of crew 1 Total 8 D1-5* One point will be awarded if at least one of the Directors/Scriptwriters/Producers/Composers/Actors (or, if there are more than three, one of the three lead Directors/Scriptwriters/Producers/Composers/Actors) is a qualifying person.

10 Based upon Limited Budget Films What might it be worth? Budget Deductions Bond Financing Option payments for book rights Development Entertainment Publicity E + O Insurance Capital Expenditure Per Schedule 1 films Core Expenditure Is UK core expenditure > 25% of total core expenditure? No Yes End Is UK core expenditure > 80% of total core expenditure? No Yes Tax Credit = 25% UK core expenditure Tax Credit = 20% of total core expenditure

11 How do you calculate the value? Expenditure on or after 1 April 2013 Benefit based on UK spend UK spend is defined as goods and services used or consumed in the UK In many cases, will correspond to where activity takes place; e.g. shooting, vfx, sound and picture edit HOWEVER, there are exceptions: - Book rights - Writing fees - Producer - Director - Production designer - Music rights - Composer - Props - Costumes Production fees & overheads

12 How do you obtain the money? Need three things DCMS certificate (interim/final) Statutory accounts Tax return Can make interim claims during production DCMS turnaround time is 21 days HMRC turnaround time is 28 days

13 Transitional Rules 1m per slot time hour limit Cost incurred pre 1 April 2013 used or consumed TVPC Requirement Timing of claim

14 Use of SPVs Advantages Legal Flexibility Accounting HMRC enquiries Assets & production fees Disadvantages Admin burden Returning series

15 Conclusion Compatible with EIS & other national incentives Co Productions No cap on funds available or budgets of TV programmes Nationality of talent irrelevant provided the production qualifies as British under the Cultural test Quick turnaround Paid direct from UK Government, no middlemen. Will be bankable and certain

16 Our services

17 Our clients Saffery Champness Key Contacts- Film & TV Moses Nyachae m Stephen Bristow John Graydon Nigel Burke nigel.burke@saffery.com

18 Wiggin a full service offering to the media industry OPTIONING/ ACQUIRING RIGHTS BROADCASTER LICENCES DEVELOPMENT ENGAGING WRITERS SETTING UP SPVS ADDITIONAL WIGGIN EXPERTISE: COMPANY SECRETARIAL DEFAMATION/PRIVACY CLEARANCE LABOR ISSUES JOINT VENTURES GAP/ EQUITY & DISCOUNTING PRE-SALES STUDIO HIRE/ OFFICE SPACE/ LOCATION HIRE MUSIC FINANCING PRODUCTION PROPS/ COSTUME/ EQUIPMENT TAX CREDIT STRUCTURING ENGAGING ACTORS/ DIRECTORS/ CREW/ STUNTS/ EXTRAS/ GUEST STARS MEDIA FINANCING UK TV TAX CREDIT QUALIFICATION TAX STRUCTURING UK GUILDS MUSIC COPYRIGHT/ TRADEMARKS REAL ESTATE MEDIA LITIGATION STRUCTURING CO-PRODUCTIONS UK/US GUILD ISSUES DIGITAL DISTRIBUTION ONLINE CONTENT/APPS CONTENT PROTECTION DISTRIBUTION AGREEMENTS DISTRIBUTION GUILD RESIDUALS/ RE-USE FEES/ ROYALTIES

19 Wiggin a full service offering to the media industry Largest media practice in the UK with over 55 lawyers Advised on over 15 sales or acquisitions of TV indies since 2009 Advised over half the UK producers awarded YouTube channels in 2012 The only law firm in Europe to represent all six US film studios Represent UK and US producers, broadcasters and distributors throughout the TV industry Wiggin EP dedicated to sourcing finance and distribution for the film and TV industry

20 Wiggin the leading legal adviser to the Film & TV industry We re proud to work with: Your key Wiggin contacts: Sarah Bing Partner t: +44 (0) e: Neil Gillard Partner t: +44 (0) e: Charles Moore Partner t: +44 (0) e: Guy Sheppard Partner t: +44 (0) e: Michael Brader Partner t: +44 (0) e:

21 MONETISING TELEVISION TAX CREDITS 30 th May 2013 JUDITH CHAN Coutts, Media Banking Office

22 Monetising Television Tax Credits KEY REQUIREMENTS Producer must be able to demonstrate: Ability to Qualify for the tax credit - Interim Certificate from BFI Evidence of the value of the tax credit - Formal Opinion from an acceptable accountant Programme is fully funded - Finance Plan to be reviewed 22

23 Monetising Television Tax Credits STRUCTURE Lend to TPC, i.e. the UK company claiming the tax credit Advance rate minimum 85% of estimated valuation Bank has security over the tax credit TPC sets up repayment account at Bank and HMRC will be directed to pay in to this account - Bank to see evidence via tax return - Bank to have a charge over this account 23

24 Monetising Television Tax Credits SUMMARY Direct payment from the Government Work with experienced accountants and lawyers Tried and tested in the film business 24

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