Tax Avoidance Using Complex Partnerships and Film Tax Relief

The Government will introduce legislation in the 2006 Finance Bill, effective from today, to counter a complex tax avoidance scheme exploiting the tax relief intended for film production in the UK. Today's measures are aimed at countering tax avoidance by individuals who are partners in businesses where tax relief has been derived from trading losses generated by film tax reliefs. The film tax reliefs operate on a tax deferral basis. Avoidance schemes have been devised which seek to turn this tax deferral into a permanent tax advantage by avoiding the tax charge which would otherwise arise on their share of the partnership’s income in later years.