section 481 film tax relief

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rupert7

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I am interested in the film tax relief but i am curious as to how risky it is.
My understanding is that it is funded as follows
€50,000 investment (€16,500 my own money + pre arranged loan)
net gain if film completed €4,000

If the film is not compeleted do you lose your full amount invested?

If so it seems like a lot of money to risk for a relatively small amount to gain.

How risky is it? Are there certain film companies where if you choose them the risk is greatly reduced due to good track history?

Does anyone know where the track history of these companies can be got?
 
paddy26 said:
You should contact HBC. They are the experts in this field.
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"The Experts" - what do you base that on, please ?

... I know they offer investments, but they are not the only ones who offer this service etc.
 
They have done a lot of the larger project such as Camelot etc. Mazars I believe also provide these products.
 
There are several accounting/finance firms in this field. However they are not the place to go for independent advice as they have a vested interest. You should ask your accountant.

Having said that, here's my amateur opinion: Section 481 is not as transparent as it seems. In fact it is far less risky than it appears to be. Production companies are required to set aside the amount promised to investors (usually about 70 percent of the initial stake) in a year or so after the initial investment. It is extremely unlikely that the investment will not perform exactly as promised in the prospectus.
 
extopia said:
There are several accounting/finance firms in this field. However they are not the place to go for independent advice as they have a vested interest. You should ask your accountant.
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Would the big firms like HBC not have much more experience with these investments and be able to advise a reputable film company thus making the investment less risky?
 
Big firms like HBC... as opposed to?

Which other firms are you reluctant to do business with and why?
 
Sorry extopia, i misunderstood you.
I though you were saying that you could do the scheme through your accountant but i see you are saying that you should get independent advise from your accountant.
 
HBC offer €1,800 return for a €8,500 investment. will an "application fee of €400 that reduces your return to €1400. And if you want to get independant financial advise that reduces your return to €1,200. Hardly seems worth risking €8,500.
 
on researching a little futher i found two films/series where people investing under section 481 lost their investment, treasure island and michael collons.
does anyone know the total number (or any other) films/series where people lost their S481 investment.
If you know the production company is there any way of finding out how many S481 films/series thay have run and if any had not been completed or completed in time?
 
Hi,

I think you are wrong on Treasure Island. It was on Sky One hence that would tend to follow that it has completed.

Paddy
 
michael collins also got completed but i think there were problems/delays which meant that they weren't completed within the correct time-frame.
 
rupert7 said:
on researching a little futher i found two films/series where people investing under section 481 lost their investment, treasure island and michael collons.
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Would be interested in your info sources on this?
 
rupert7 said:
Do all the firms charge similiar rates? anyone wknow who has the best value?
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I don't think an "application fee" is the norm, although I've seen it on a recent offer (The Vikings). Maybe this will become more common in the future as there seems to be a lot of demand for S481 (not surprising given the low risk and arguably overgenerous return).
 
The application fee associated with 'The viking' was because they weren't earning anything on the financing . I was told that they wouldn't be charging it on their own schemes.

AFAIK Divine Rapture was the only failure where section 481 investors got burned - and there was a subsequent change in the taxation rules to stop it happening again.
 
NotMaurice said:
AFAIK Divine Rapture was the only failure where section 481 investors got burned - and there was a subsequent change in the taxation rules to stop it happening again.
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Ah now there were a few fiascos with section 35/481. Investors didn't always get burned. Space Truckers was a notable abuse, where the production company allegedly used the money raised for other projects (not all of which were - allegedly - film related). The film was eventually made, but only after a second round of funding...

Anyway this will all be moot after this year's budget, as film relief will now move to a tax credit system for the producer. In other words, the tax relief is no longer to be offered to wealthy (or indeed poor) investors. Instead, the action that investors were offered (to compensate them for their "risk", even though there was little or no risk) will effectively be reclaimed by the government.

Nice tax relief when you could get it.
 
extopia said:
....

Anyway this will all be moot after this year's budget, as film relief will now move to a tax credit system for the producer. In other words, the tax relief is no longer to be offered to wealthy (or indeed poor) investors. Instead, the action that investors were offered (to compensate them for their "risk", even though there was little or no risk) will effectively be reclaimed by the government.

Nice tax relief when you could get it.
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Hello,

I have previously been lucky enough to avail of some tax relief, via these S481 investments but was not aware there had been a change.

Can you please explain your comments above and how they remove the former tax break, for an individual investor ?

Sorry if I'm missing the obvious in your original post.

Regards

Mr. Earl
 
The plan is to phase out section 481 for personal investors by 2016. Filmmakers will be subsidised directly in the form of a tax credit, refund, or cash payment. The idea is that filmmakers will benefit by the same amount as they do now, but the exchequer will save money by removing the "leakage" represented by having to allow a return to investors and fees to banks and other facilitators.

In simple terms, the tax break is being phased out.
 
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