The BBC and its Tax Relief

For a number of years the film industry has probed a fertile ground for those seeking to save income or corporation tax using rather artificial structures. Various British Governments of various persuasions have tried using tax as a means of “helping” British film making. It seems that the politicians are interested in the prestige of having a successful film industry as well as any economic benefits.

As a result H M Revenue and Customs have been testing various film related tax schemes to see if they genuinely qualify for the reliefs and incentives that are on offer from the tax paying population of the United Kingdom.

The latest reincarnation of these schemes starts from the 2012 decision to allow tax credits for those involved in film making. These tax credits were theoretically only of any use to companies that pay corporation tax. Although the BBC is a corporation, it does not pay corporation tax, so when it learned of the £265 million pot of tax credits, it must have smiled, wiped its mouth and said itself “I’ll have some of that” and then set about arranging that even though it did not pay corporation tax, it would set up some structures that did, in order to get a slice of taxpayer’s money to add to the £3.5 billion a year it collects from taxpayers from the licence fee, paid by most people out of income on which they have paid tax.

The BBC claims “Having taken the appropriate legal, tax and regulatory advice, the BBC considers that it is best able to deliver the benefits associated with the UK tax credit via commercial subsidiaries.” In other words, having got a large chunk of money from tax payers in order to make programmes, it is perfectly morally correct for it to get another smaller chunk of taxpayer’s money to make more programmes.

Actually, I expect most BBC programmes make losses, otherwise, if the BBC were a profitable institution the licence fee would be much lower. It can make profits by selling its programmes around the world, but obviously does not do enough of this to enable itself to become self-sufficient. It has the licence fee (rightly or wrong) to spend money on programme making and should budget within that licence fee and not set up subsidiaries as pretend commercial companies who then surrender those losses in order to get a share of the tax benefits.

It is morally wrong for the BBC to dip into a pot of money that the Chancellor has set out to help encourage film making. It must be quite hard enough for small film making companies to compete with the BBC in film making (they have less money than the BBC and many fewer opportunities to distribute their films than the BBC) without those small film makers having to compete with the BBCF for tax relief.

One Response

  1. BBC worldwide says it returns £175m to the BBC. Its sales are more than £1000M. I wouldn’t mind betting that £825M doesn’t represent real operating costs but just another fiction to fleece us.

    In passing, I am now heartily sick of relentless adverts on BBC which promote BBC programmes. I have often wondered if the international version on the internet uses these far too frequent interruptions for commercial advertising.

    And what about the erosion of the predominance of english (i.e not american) speakers. The Home Service (recently re-branded Radio 4) cannot let a programme go by without some whiny nasal american nonentity making a comment.

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