Revenue probe into tax relief on movies threatens investors
Exemptions for almost 1,000 are under review after ruling
ALMOST 1,000 people could be in danger of losing lucrative tax reliefs granted to them for investing in film projects as a Revenue Commissioners probe enters a crucial stage.
The Revenue, which this week published its annual report, is investigating claims for relief by investors in film-production companies and is in contact with 964 taxpayers about the scale and type of relief they claimed.
While there is no certainty that any of these people will lose reliefs, the Revenue did win a major victory in January 2009 when a challenge from a film investor was defeated.
An investor objected to the Revenue withdrawing tax relief from him on the grounds that he had failed to show the investment in question was spent mainly in Ireland.
That challenge failed and the ruling paved the way for Revenue to launch an in-depth scrutiny of the way reliefs were being claimed in Ireland.
A large number of movies have been financed partly by tax reliefs, including 'Angela Mooney Dies Again', starring Brendan Gleeson, which was financed by the Merlin company. The legal challenge last year involved investments in some movies funded by Merlin companies.
It is understood that a number of investors and companies involved in film financing have been audited in recent times in relation to tax relief. The Revenue's annual report last week included film reliefs as a possible area of tax avoidance.
The main relief claimed by film investors is Section 481 of the Taxes Consolidation Act, which is designed to promote the Irish film industry. The amount of relief that can be claimed depends on how much money is spent in Ireland on cast, crew and facilities.
Investors are able to invest in special-purpose vehicles and can claim tax relief of up to 100pc. However, the production company behind any film must have experience in movie or television production and the film itself must be a feature film or a television drama, animation production or creative documentary. It cannot be a commercial, game show, reality show or soap.
After the film or television series has been completed, the Section 481 company has to prepare very detailed audited accounts and is required to make a detailed report to the Revenue Commissioners.
The commissioners have been known to raise detailed queries of Section 481 production companies.