UK Film Council chief executive officer John Woodward yesterday outlined the proposals for a replacement to the Section 48 tax break that the support body has presented to the government.

Woodward was speaking at the Screen International UK Film Finance Summit, where he gave the keynote address. It came on the same day as the Council published a consultation document on its funding and policy priorities for the next three years.

The existing Section 48 is due to expire in July 2005. Woodward said the Council's proposals envisaged a new tax break - dubbed 'the son of Section 48' - that was comparable to the Luxembourg transferable tax credit system. He explained that it was designed to be available to both producers and distributors.

Without going into specific details, he said that the tax credit "has the advantages of being simple, which would limit the opportunities for misuse."

He added that it was film specific, and that the proposals were potentially much more efficient than the existing sale and leaseback mechanism and would provide "greater financial benefit to the film industry because less money would go to the middle men."

"It's a proposal that builds on the success of Section 48, but encourages the production and distribution sectors to work together," said Woodward.

The Council submitted proposals for the new tax relief to the Department Of Culture Media And Sport at the beginning of October. The move followed the creation of a tax strategy group this summer, chaired by the Council with the British Screen Advisory Council and producers body Pact as members.

Woodward explained that politically the existing Section 48 scheme was 'damaged goods' - hence the need to lobby for a new version of the scheme - and that it was not perceived to be building a UK industry that was sustainable in the long term.

"Section 48 is a good mechanism for getting more British films made but it is an imperfect mechanism for addressing the market failures which beset our film industry," he added.

The content of the Council's proposals for a replacement to Section 48 has been the subject of extensive debate in the UK film industry ever since the body's chairman, Sir Alan Parker, called for a more distribution led approach to film production in a speech at BAFTA last year.