So, they don’t actually pay corporation tax, they’re a non-profit, but they can claim corporation tax credits.
It has taken advantage of a decision by George Osborne in 2012 to allow cuts in corporation tax to high-cost British-made dramas, comedies and animation, in an attempt to increase filmmaking in the UK.
Independently-produced programmes, or those made by BBC Worldwide, which is the BBC’s commercial arm, would be eligible for the cuts, the Chancellor indicated.
But BBC shows produced in-house for public-service channels could not be claimed for, because the BBC is non-profit making and therefore does not pay corporation tax.
The BBC then created a commercial subsidiary for drama – Grafton House Productions – and a subsidiary for comedy – BBC Comedy Productions.
It is through Grafton House that £520,133 has been reclaimed as nominal corporation tax for two dramas: The Interceptor and One Child.
The BBC could receive more, as there is a total budget of £205million for tax relief to drama, and a further £60million for animations.
Well played that man, well played.
It is through Grafton House that £520,133 has been reclaimed as nominal corporation tax for two dramas: The Interceptor and One Child.
Polly, Tax Justice and Ritchie will be condemning this shameless tax structuring in three, two one …..
[Crickets Chirping]
Incidentally, how did someone as incompetent as Osborne end up in charge of the Treasury?
So the BBC is accused of behaving just like Google, Starbucks or Amazon. Well as far as I can see that seems a very sensible way to go . Good on them.
> how did someone as incompetent as Osborne end up in charge of the Treasury?
Yes, with such a fine array of geniuses on the Conservative benches, that is a bit of a puzzler.
He is a friend of Camoron is he not?. What kind of man doesn’t help his friends out ?.
It’s bizarre to see this compared to Google or Amazon or whoever. This is a case of outright tax fraud, since there’s clearly no substance to the transactions, and is therefore criminal. It can’t quite be said to be tax evasion, but it’s most certainly not tax avoidance.
Martin
Fraud? Really? Do those subsidiaries not exist as legal entities then? Are they not producing drama programmes then? Is there no real substance to them in the way there is to, say, Google Ireland?
If the companies are only set up to perform activities that would be performed anyway, are wholly owned, and are only set up that way in order to claim a tax rebate, then yes, there’s a complete lack of economic substance.
Martin
“This is a case of outright tax fraud,”
“It can’t quite be said to be tax evasion, but it’s most certainly not tax avoidance.”
What?
It’s either legal or it’s not. Make your mind up.
Martin
The entire creative industries credit is based upon film and TV studios creating SPVs to produce a film and claim the tax credit. The film is deemed to be a separate trade. You are in effect saying Parliament, which voted to bring in these credits, is engaged in a giant fraud. Can’t be I’m afraid.
PF, there’s no contradiction there. Tax fraud encompasses more than just tax evasion.
What, so you stay within the law it you’re guilty of fraud? Bollocks.
Go on then. You want to accuse people of fraud, describe the fraud. That is, describe it in a way we wouldn’t find on the Tax Research UK blog.
Oh come on, Ironman. The Beeb is claiming tax relief to encourage it to make films exactly as the treasury intended. OK.
The only teeny tiny little problem is that the beeb is already paid 3500 million to do exactly that. In other words, the beeb is claiming a tax break to encourage it to do something that it is in fact specifically paid by the taxpayer to do. If it didn’t get the tax break, what would it do? Sell the widows and go into South American zinc? (Python, obviously.) No. It would make the bloody films, as it is paid to do. Therefore, no encouragement is necessary.
And why the fvck should a Conservative chancellor be thinking up little schemes to line the beebs pockets anyway? They hate him and all he stands for.
Martin
“PF, there’s no contradiction there. Tax fraud encompasses more than just tax evasion.”
That’s not what I said.
It looked as if you were allowing “ambiguity” into the process 🙂 – and hence I suggested making your mind up as to whether it was legal or not.
Let me help:
Fraud is illegal.
Evasion is illegal.
Avoidance is legal.
Are the BBC acting legally or illegally?
I’m not interested in “immoral”, “should be illegal”, or “it’s just not fair”, or other variations of Murphy style “fudge”…
OK, I understand better what you are saying (I’ve re-read your original).
Are you really saying that what they have done is illegal (ie “criminal tax fraud”)?
Roue Le Jour
Yes I can see it can irritate if the Been ‘ s funding is seen as tax and there are good arguments (for another day) for Changing the funding model. However, here the Been is acting exactly.as.every.other producer is.and this tax regime is aimed at getting the producers to make the sort of TV that just hasn’t been made in the UK before, eggs. ‘Game of Thrones’. BBC wants to make these programmes as well. I really can’t see that it has done anything wrong at all. As for ‘fraud’, that is just rubbish.