It has been a taxing year. The Treasury's February'bombshell' outlawing tax partnerships such as Ingenious'Inside Track and Grosvenor Park's First Choice knocked a hole through thefinancing of many productions.

In the wake of that decision, the emphasis was on damagelimitation. Though few could work out how the government's much-vaunted20% tax credits for producers were going to work in practice, it seemed by thesummer that the Treasury was prepared to cut the UK film industry some moreslack. Then, in late November, the Treasury launched another broadside againstthe industry, saying it was fed-up with the exploitation of tax relief schemesthrough 'double dipping' (claiming relief more than once on a givenpiece of expenditure.)

Overheard this year

'These people are either morons or are beingcompletely duplicitous. Obviously, the dreaded middlemen will be needed tocashflow the future value of the tax credit so the producer has the money tospend on the film.' Dan Taylor of Grosvenor Park on Treasury attempts tocut out the 'middlemen' from the new 20% tax credits.

'As a major British producer, our constant frustrationin all areas of film-making, whether it's a $1m movie, a $10m movie or$50m movie, is finding the screenwriting talent. The real frustration is thatwriting is what feeds everything. If we had a healthy screenwriting tradition,everything else would fall into place.' Working Title Films' TimBevan.

'What allof us are despairing of is the dreaded pessimism of UK distributors. Anythingthat is adventurous, different, groundbreaking or original is completelyignored by the distribution fraternity. Having dull and witless distributorsmeans that the agents dictate. Whatever they think their big star actors shouldbe in is what is going to get made.' Stephen Woolley, producer.

'These are not the days any more when Cool Britanniarules. These are the days of tough government spending rounds...what we have tounderstand is how special the bubble we have created is in the context of the realworld and other decisions the government has to make.' UK Film Council boss John Woodward.

Breakthrough talent

As King Arthur, Clive Owen may not have been able to rouseUS audiences, but he certainly made a mint overseas. A possible 007, and anonline star after appearing in all those BMW short films directed by theworld's great style directors, he is now drawing raves for MikeNichols' Closer.

His contemporary, Daniel Craig, has been around just as longon stage and screen in the UK and, like Owen before him, is now poised forinternational recognition. Craig's presence elevated Brit gangster flick LayerCake into something truly classy and hisrole in Roger Michell's Enduring Love should bring him Bafta recognition at the veryleast. Oh, and his name has been mentioned in connection to James Bond, too.But then, who has not'

The year ahead

'My hope is that finding the resources to make filmsbecomes easier, which is surely the hope of every independent film-maker. Myfears are the complete drying up of any resources out of the US for independentmovies. It's so confusing how to finance films. There's a lack ofclarity. It's always been difficult to get money to make films and itisn't getting any easier.' Jeremy Thomas, producer.

Box office snapshots

Highest-grossing film: Shrek 2 (UIP) $88.2m

Highest-grossing local film: Bridget Jones 2: The Edge OfReason (UIP) $65m

Highest-grossing arthouse film: Lost In Translation (Momentum Pictures) $19m