Certified Red Tape

By Raindance

Trevor Garlick – a friend of Raindance - got in touch with us yesterday asking if we were aware of “the BFI and HMRC for the Certification Process for British films?  And the audit that then happens” We weren't, so he explained.

The following is mostly in his own words, and is only one man's experience, but it highlights some potential pitfalls and problems with the current system that are useful for anyone trying to make a film in the U.K.

The Certification Process is something all producers wanting to qualify their film as British and to thereby access the UK's film tax credits will need to go through. This is done through the BFI (http://www.bfi.org.uk/about/certification/) but also requires the HMRC – and the two aren't joined up.

This creates several issues:

1. HMRC believe all people on a film, apart from a select few, are employees - not self employed. Which leads to a huge liability of NIC and income tax. This is for anyone who works more than 6 days (including rest days!!!!!) on a movie in the UK - even though they believe they are self-employed.

2. The BFI Cultural Certification Unit are not just interested in whether a film is British, they look at budgets, crew names, locations etc., a long winded process.

3. BFI and HMRC duplicate work, and the BFI does not necessarily agree with your declarations - even though you have to declare the same thing twice (there is an interim and final certificate)

4. The HMRC film unit has no relationship with the BFI. They can choose what and when to pay on a certificate - this includes no payment if they deem fit. Therefore BFI work is pointless - a certificate means nothing.

5. The HMRC automatically set up (against your request) a PAYE scheme for your film company - you then get letters stating you owe quarterly returns (with penalties)
An HMRC audit for PAYE and NIC then automatically happens, funds are withheld from your Credit Scheme application (if any interim payments etc. are actually agreed). You then get sent a guidance booklet of how HMRC views the film world – vitally, everyone is an employee if they work for 6 days or more (including rest days). You have to copy contracts etc. list all people all payments etc, equipment used, grades etc

6. Before some payments, HMRC may ask you to get final certificate (even though you hold an interim one) - you go back through the BFI process again - they again ask questions on budgets and crew (and if you use the same crew for more than one film they seem to worry)

99 Minute Film School

In Conclusion

Applying for a BFI certificate merely puts you on the map for a significant audit and when no money exists - frankly you're dead in the water.

However, Trevor was in touch with both the BFI and the HMRC on the phone and had good experiences with both of them:

“they really listened and they were both pleased to hear feedback and concerned about it. I also had apologies from both BFI and HMRC

The HMRC also agreed on the spot to re-organise their web pages to ensure ALL film related guidance appears in one place on the portal, and that they will collaborate with the BFI to ensure the right links are in place to get the whole story at once! No timeline, but it's agreed and they really understood the issue.”

Useful links:
BFI Certification
PAYE rules
HMRC Film Co handbook

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Raindance Film Festival will run from 26 Sept – 7 Oct 2012 at the Apollo Cinema in London’s Piccadilly Circus.
 
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