You’d be wrong if you assumed that the tax regulations are very specific and fully explained. The actual legislation is rather vague in some areas and open to interpretation. In the last year HMRC have published guidelines for these woolly areas, but some ambiguity still exists. A perfect example can be found in the film tax relief. The law states:

This does not say it must have been screened in the cinema, just that you intended it to be. The law goes on to define “theatrical release” as:

Hmmm… That last statement is not very helpful, is it? I asked an Inspector at the Manchester Film Tax Unit for more details about the definition of “a significant
proportion” and he said:

The final interpretation will be up to HMRC but I would suggest that if you’re making a no-budget short film with your mates then it’s unlikely to pass this test. However, a short film by professional filmmakers with a track record of festival screenings and detailed finance plans will stand a much better chance. The HMRC may take a number of factors into consideration including shooting format, udget, screening plans, confirmed festival screenings and any deals with sales agents. It’s up to you to make the case.

If you have your sights set on taking advantage of the UK Tax Relief and feel the need to strengthen your application, then you may wish to join with other filmmakers and organise cinema screenings. Hiring a cinema for an hour can be very reasonable, certainly when split between a few filmmakers. If you’re serious about recouping money via theatrical release, then the HMRC will have a hard time disallowing your application on that particular issue.

The final word on this matter should go to the Inspector I spoke to at the Manchester Film Tax Unit: