The new UK tax credit looksto have already paid dividends, luring New Line's $150m adaptation of PhilipPullman's His Dark Materials: The Golden Compass away from the Czech Republic to Shepperton Studiosjust outside London

The prospect is bound toprovide a major boost to the British studio sector following a lengthy periodof uncertainty in which various big budget international films were lost, amongthem the talismanic James Bond movie Casino Royale and its immediate follow-up.

A production office for TheGolden Compass is already set up at Shepperton. According to Screensources: "the majority" of thefilm is likely to shoot at Shepperton.

On April 1st, new film taxcredits were introduced in the UK to replace the abandoned Section 42 andSection 48 reliefs. The new credits are worth up to 16% for higher budget filmscosting £20m or more.

Although no-one quite knowshow the UK film tax credits will work in practice - and the they have yetto be enshrined in law - there is already evidence of a mini-stampede amongBritish film financiers to cash flow the new credit.

"It was definitely one ofthe Government's intentions to encourage inward investment. If Golden Compassdoes go ahead, it will provide a strong endorsement of the tax credits,"commented Lucy Elwes from accountancy firm KPMG.

"The more you spend (in theUK), the more they (the tax credits) are worth."

Speaking in Cannes, VladimirKuba, chairman of the board of directors of Barrandov Studios, expressed hisstrong disappointment that it had lost out on The Golden Compass.

The film was originallypencilled to shoot in Prague.

"Several days after the concrete expression 'OKwe want to go to Prague,' they changed their opinion. It was very unpleasantfor us," commented Kuba. He suggested the new UK tax credit may have been amajor factor in the decision.

The studio does however have the next James Bond in its immediate gun-sights.

007's most recent outing Casino Royale, starring Daniel Craig, finished shooting in Prague earlier this week. Now, Barrandov chairman Vladimir Kuba has confirmed that the studio is negotiating to bring the Bond franchise back to the Czech Republic.

"They (the Bond) producers had a good experience (at Barrandov)," Kuba said. "I think they want to promote Daniel Craig and very soon after Casino Royale, they want to shoot a new Daniel Craig movie."

'Meanwhile, Barrandov is also hopeful of bringing two other big-budget franchises, the new Narnia picture Prince Caspian and Hellboy 2 to Prague.'One title scheduled for Barrandov later this summers is horror picture Hostel 2.

Kuba acknowledged that the competition among European studios for runaway international production is growing ever more intense. In a bid to strengthen Barrandov's hand, the local industry is lobbying hard a Czech tax incentive to rival those offered by its rivals such as Hungary.

In the meantime, building is currently underway at Barrandov on what promises to be the largest sound stage complex in Europe.