Myriad Pictures' The River King has been thrown into uncertainty mid-shoot after the UK government challenged its application for British status.

Set up as a UK-Canadian co-production, the supernatural murder mystery needs to qualify as British in order to access tax relief under Section 48. Movision, the tax-based fund co-financing the film, is to provide at least 25% of the budget through its Section 48 production equity scheme, which is in addition to a sale and leaseback deal under Section 48 for another 15%

But the Department for Culture, Media & Sport (DCMS), which grants British certification to films, has challenged the film's ability to meet the minimum UK spend of 40% on official UK-Canadian co-productions. At press time, River King, which stars Edward Burns and Jennifer Ehle, was continuing its shoot in Canada. Although Myriad's London office was not available for comment, the financiers are lobbying hard for DCMS approval, with a decision expected as early as today (Friday).

"Movision is committed to this film," said Movision head Peter James. "We will keep it going and we will do all we can to ensure it will eventually qualify as a British film, which I genuinely believe it will."

"This is a very stressful time for all the film-makers and all our efforts are focused on continuing to ensure that this film conforms to the UK/Canadian co-production treaty and is delivered at the highest possible artistic level," added Marion Pilowsky, Myriad's international production chief.

One source said the film received a non-binding pre-approval from the DCMS when it was previously set up with tax-based financier Grosvenor Park. Movision stepped in at the last minute when Grosvenor Park's First Choice fund was frozen on February 10 by an earlier government crack-down. Although First Choice did not need to qualify as British to access its tax relief under accountancy rules, it usually backed only British-qualifying productions so as to be seen to be acting responsibly with taxpayers' money.

Sources close to the government said that the tough stance comes as the Treasury is looking for ways to rein in minority UK co-productions, the number of which has exploded since Section 48 was introduced in 1997. Movision is amongst several companies that have financed or co-produced slates of minority UK co-productions, an activity which is expected to come under scrutiny in a far-reaching review of co-production guidelines which the government is holding at the moment. In River King's case, however, British elements include such core roles as its producer Michele Camarda, director Nick Willing, star Ehle and writer David Kane.

A spokesperson for the DCMS said that it did not comment on specific cases but added that "we will have explained our reasons to the producers."