Clause 32
Finance (No. 2) Bill
6:15 pm
Jeremy Wright (Rugby and Kenilworth, Conservative)
May I belatedly welcome you to the Chair, Sir John, and congratulate the Financial Secretary on his promotion?
I want to make a few remarks about the way in which clause 32 may or may not reflect reality in the world of film. I speak not as an expert but, like other members of the Committee, as somebody who watches the occasional film when I have the time. I notice when I do so that a number of production companies feature in the credits before the film starts. It seems to be increasingly common for more than one production company to be involved in the making of a film. That being so, it must be the case that clause 32 makes it extremely difficult for that situation to occur and for each of the companies involved to obtain any kind of UK tax relief, notwithstanding the ingenious machinations of any lawyer who might be involved to redefine the words “responsible”, “engaged” or “direct”.
None the less, I accept that any assistance for the UK film industry is a good thing. I invite the Financial Secretary to consider ways in which he can make it better and more effective. I made the point in relation to an intervention on my hon. Friend the Member for Chipping Barnet that there is a contradiction between clause 32—a rigorous and restrictive structure, designed to prevent more than one company from being involved in the making of a UK film and obtaining tax relief—and clause 41, which indicates clearly that in order for a company to obtain UK tax relief it is necessary only for it to have spent 25 per cent. on UK expenditure. That being so, the Government must envision that 75 per cent. of the expenditure could be spent abroad. If it is, it must be spent on companies that are based abroad. Surely if 75 per cent. of the expenditure is going abroad, 75 per cent. of the work is going abroad, so it must be obvious that lots of other companies are involved in the making of the film. The rubric of clause 32 is too restrictive.
The other difficulty that I foresee, and which was alluded to by my hon. Friend the Member for Chipping Barnet, relates to subsection (5). It is clear that the way in which the Government propose to resolve the difficulty that more than one company may appear through the first parts of the clause to be a film production company is that they require that potential conflict to be resolved by determining which company is most directly engaged in the activities listed in subsections (3) and (4). If I may put it delicately, in an industry that is not necessarily averse to litigation, there might well be a great many long, complex and no doubt expensive legal disputes simply to establish which of several companies involved in the production of a film is the one entitled to UK tax relief. I am sure that the Financial Secretary would not wish that to happen—I certainly would not—and I invite him to reflect on that when he responds.