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The production spent £208 million ($300.3 million) in the country and recouped £31.8 million ($45.9 million) via the Film Tax Relief (FTR) scheme, according to a new study by UK-based film industry researcher Stephen Follows.
His research shows the producers of Thor: The Dark World spent £ 164.6 million ($237.6 million) and claimed a rebate of £25.6 million ($37 million). Follows calculates that in the seven years up to 31 March 2014, 1,240 films received a total of £1.45 billion ($2.09 billion) via the FTR.
The rebate usually equates to 20%- 25% of the production spend. To qualify, films must spend at least 10% of the budget in the UK, pass a cultural test as a British film administered by the British Film Institute, or be certified as an official co-production. Only 11% of the claims were made by films budgeted over £20 million ($28.8 million) although they accounted for 67% of the money paid out, he found. This means that films costing more than £20 million received £850 million ($1.2 billion) from the UK taxman, not adjusted for inflation.
The BFI releases the names of all films which received their British film certification going back to 2007, but no financial details. Follows analyzed the accounts lodged with Companies House by the production entities, UK limited companies, to determine how much tax relief was claimed and the total amount of money spent on each production in the UK.
The ‘tax’ figure is the total amount the limited company claimed back in tax since it was set up. The ‘cost of sales’ is the total amount of money spent by the company in the UK. He acknowledges this is an imperfect method because the accounts do not show if the companies had other reasons to claim back tax or if money was spent on the film outside these special purpose vehicles.
Some films may not have been finished and future filings may reveal a larger budget and greater tax relief claims. For example, Jungle Book began shooting on 12 August 2014 and so far the producers have filed one year’s worth of accounts, up to 31 January 2015. “It seems unlikely that this tentpole Disney film with an A-list cast will only cost the £53 million ($76.5 million) declared so far,” he observes.
Also, some films such as Disney’s Ant-Man set up a UK limited company to cover the UK portion of the film’s work. In that case the company spent £23.6 million ($34 million), which is about a quarter of the $130 million budget listed on Box Office Mojo.
Follows was prompted to do his research following last month's BBC4 program The Great Gangster Film Fraud, a feature-length documentary which recounted the story of a bankrupt Jordanian entrepreneur and an unemployed Irish actress who used a combination of tax frauds in an attempt to claim £2.5 million ($3.6 million) from Her Majesty’s Revenue and Customs (HMRC).
They said they had made a £20 million ($28.8 million) film and so were entitled to money back via the FTR. Accused of fraud, they hastily rushed out a film ironically entitled A Landscape of Lies for £84,000 ($121,000) in the hope this would placate HMRC. That ruse did not work and in the first ever prosecution of a FTR fraud case in 2013 Aoife Madden and Bashar Al-Issa were jailed for four years and eight months and six and a half years respectively.