Delays over tax guidelines ‘devastating’ parts of film sector: Lobby accuses revenue of dragging its feet over information on section 481 scheme

Film industry groups have said that delays in issuing new guidelines for the state’s film tax break scheme are having a “devastating” impact on the parts of the Irish sector.

The section 481 tax break scheme allows producers to write off millions of euros, and has been credited by the industry with driving growth of the sector in Ireland.

However, industry lobbies have now criticised the Revenue Commissioners, which they say is dragging its feet on the issuance of new guidelines for users of the scheme, potentially endangering growth in the sector.

Animation Ireland chairman John Phelan said that in the absence of the guidance from Revenue, there is a “huge amount of misinformation and confusion over what the new guidelines will say, and this has been devastating for Irish animation companies trying to fund new projects, compete with overseas companies, and create new jobs here in Ireland.”

Film-makers may be inflating budgets for tax breaks, Revenue warned
He also criticised some proposed changes to the tax break rules, which do not take into account constraints limited to animation projects.

According to internal Revenue briefing notes from last June, a so-called “tax and duty manual”, which details the tax authority’s approach to expenditures eligible for the credit, has been prepared and “is nearly ready for publication”.

However, Screen Ireland chief executive James Hickey told The Irish Times that the industry has been awaiting the new guidance for 18 months. “The delay in the publication of these guidelines creates uncertainty around section 481. This in turn creates difficulty for indigenous production activity across film, TV and animation as well as in attracting large scale film and TV production to Ireland.”

In a statement, Screen Producers Ireland (SPI) said that the publication of the new guidelines would help provide a solution for the “chronic delays” in the current operation of the tax credit scheme. SPI said that Revenue has “consistently postponed” the new guidance note, despite written submissions from several lobby groups.

The industry criticism comes after The Irish Times reported that Revenue chairman Niall Cody was warned that film-makers who may be inflating their budgets to secure outsized tax breaks were playing “catch my if you can” with the taxman.

A briefing note prepared for Mr Cody said that sanctions for manipulating the scheme were underpowered and a the team policing it was under resourced. “There is an element of ‘catch me if you can’ with no possible down side to inflating budgets and spend,” according to the advice.

Source: Jack Horgan Jones; The Irish Times,