Explanatory note

This Order modifies the definition of “British film” in Schedule 1 to the Films Act 1985. This Order modifies the definition of “British film” in Schedule 1 to the Films Act 1985. Applications of the definition include the determination of what is a “relevant film” for the purposes of the 1985 Act (see section 3(7)), and the assessment of eligibility for tax concessions under section 68 of the Capital Allowances Act 1990 and section 43 of the Finance (No. 2) Act 1992.

The modified definition retains the previous requirement that throughout the period in which the film is being made the maker of the film must be ordinarily resident in a member State (if an individual), or registered and centrally managed and controlled in a member State (if a company). The previous labour cost requirement is retained with some modifications (see below). The requirement that any studio used in the making of the film be located in a Commonwealth country or the Republic of Ireland is replaced by the requirement that at least 70 per cent of the total expenditure incurred in the production of the film must be incurred on film production activity carried out in the United Kingdom.

“Film production activity” is defined in relation to a film as any activity undertaken for the purposes of the production of the film.

The definitions of “sound recording” and “studio” are deleted.

The circumstances in which the production of a film is to be regarded as completed are defined as when the film is first in a form in which it can reasonably be regarded as ready for copies of it to be made and distributed for presentation to the general public.

With respect to films produced as a series, the former paragraph 1(4) is amended to allow for up to twenty-six parts running for up to twenty-six hours to be considered as a single film if the Secretary of State is of the opinion that the series constitutes a self-contained work or that it is a series of documentaries with a common theme. Formerly, there could be at most sixteen parts with a maximum playing time of eight hours, and the Secretary of State had to be of the opinion that the films constituted a self-contained work when shown in the intended sequence.

The references to “member State” in paragraphs 4 and 7 of the Schedule is expanded to include states party to association agreements with the European Community, in cases where those agreements require film makers in those states to be treated in the same manner as film makers in member States for the purposes of this Schedule.

As mentioned above, the requirement in the former paragraph 4(2)(b) of the Schedule that the studio (if any) used in the making of the film is in a Commonwealth country or the Republic of Ireland is omitted, and replaced by a requirement that at least 70 per cent of the total expenditure incurred in the production of a film spent on film production activity (as defined in the Order) carried out in the United Kingdom. Total production expenditure incurred in the production of a film is to be calculated disregarding any amount deducted from the total labour costs of the film pursuant to paragraph 7(2)(a) and (b) of the Schedule, any expenditure on the acquisition or licensing of copyright or certain other rights (other than copyright in works created for the purpose of their use in the film), financing costs and business overheads. The former sub-paragraph 4(4) of the Schedule is deleted.

The general limitation in paragraph 5 on the use of visual images from previously-certified films or films made by a different maker is retained. The references to photographs are however deleted. A new provision is inserted allowing the Secretary of State to direct that the limitation in paragraph 5 does not apply in relation to a film if in his opinion the film is a documentary and its subject matter makes it appropriate for the limitation not to apply. The previous paragraphs 5(1)(b) and (c) and 5(4) are deleted.

The previous paragraph 6(3) is deleted, consequent upon the deletion of the previous paragraphs 4(4) and 5(4).

The labour costs requirement is modified by reduction of the percentages in sub-sub-paragraphs 7(2)(a) and (b) from three-quarters to seven-tenths and from four-fifths to three-quarters respectively. Sub-paragraph 7(3) is omitted and sub-paragraph 7(1) amended accordingly.

A transitional provision is included, allowing applicants to elect to proceed under either the original or the amended Schedule during the first twelve months in which the Order is in force.