The British productionsector is on tenterhooks ahead of a widely-anticipated clamp down on tax fundsin today's pre-budget report.

Producers have been fearingthe worst since a dressing-down from the Inland Revenue last week in whichfilmmakers were attacked for abuses including so-called double dipping undertax support mechanism Section 48.

Support body the UK FilmCouncil has been tight-lipped, no doubt in a bid to dampen government ire,while some maintain that the Government warned off investors at last week'smeeting with the Inland Revenue and there be will no further legislation.

However, producer's bodyPACT issued a strongly-worded warning yesterday saying that Chancellor GordonBrown will announce a crack down "with immediate effect on the ability to claimboth production and acquisition relief on the same film."

PACT added: "This blanketruling appears to make no distinction between legitimate financial products inthe market place and those which seek to avoid tax illegitimately."

PACT warned that filmproduction "will be thrown into chaos" if the Chancellor closes down theSection 48 tax relief, although a complete closure seems highly unlikely giventhe government's repeated declarations of support for the sector.

PACT, however, highlighted thedestabilising effect repeated clamp downs have had. "There is likely to be adramatic reduction in the production of indigenous British films," it said.

Publishedeach autumn, the pre-budget report sees the Treasury explain the measureslikely to be presented in the full budget the following spring.