The Irish tax collection service, the Revenue Commissioners, has told a parliamentary committee that 6.4% of Section 481 tax relief over ten years had gone into non-compliant productions.

The Irish Joint Parliamentary Committee on Finance spent nine hours yesterday (Nov 6) hearing presentations on the future of Section 481 tax relief for film from the Irish industry.

The Committee will issue its findings in about a fortnight's time, shortly before the Irish exchequer budget for 2004 is announced on December 3.

Presentations were made to the Committee by Screen Producers Ireland (SPI), Ardmore Studios, the Irish Film Board, the Irish Congress of Trade Unions and the SIPTU technicians' and actors' union, officials from the Department of Finance and the Revenue Commissioners, and officials from the Department of Arts, Sport and Tourism.

While those pressing the case for retention of Section 481 believe they received a very positive hearing from the Committee local press coverage was dominated by the Revenue Commissioners assertion before the Committee that 30 film projects which had availed of Section 481 relief had not complied with legislation governing the scheme.

Citing an in-house audit of the scheme the Revenue Commissioners' representative, Muriel Hinch, told the committee that the loss to the Irish exchequer arising from these 30 projects was Euros 17m, or 6.4% of the total cost of all tax relief allowed for film production over the last ten years.

According to Ms Hinch the audit had exposed "complicated structures" using sub-contracting companies which made it very difficult to determine if requirements for production spending on Irish goods and services had been met on certain films. In one instance she said money had been tracked to a tax haven.

In response to a request for clarification from a spokesman for the Revenue Commissioners said that the "audit" mentioned by Ms Hinch was in fact a summary of ongoing investigations over several years, "not into a random sample of films but into a number there were suspicions about."

While the Irish revenue service does not comment on individual cases, or whether the problems uncovered were or are associated with a limited number of companies, the spokesman conceded that the problems are not necessarily systemic.

"We don't know if it's widespread since the audit did not cover a representative sample of productions."

The spokesman said that Revenue concerns centred on productions involving:

* Inflated budgets where the tax relief was given on an amount that was not in fact spent.

* Reported production spending on Irish goods and services that was not in fact Irish spend.

* The difficulty in clawing back unwarranted tax relief since it is committed up-front rather than post-production.

* Investment containing no risk for the investor [but virtually every production would fall into this category].

* Overly complex or artificial structures creating an absence of financial transparency.

* Unnecessary tax relief being given where productions are effectively already 100% funded.

The spokesman added that the Revenue would take "whatever measures are appropriate" to recover the lost Euros 17m for the Irish exchequer.