The UK government has movedto clamp down on excessive producer fees on British films.

Under revamped co-productionguidelines published this month, the Department for Culture, Media & Sporthas targeted producer fees over 10% of production expenditure.

Although producer fees over10% are not necessarily barred, the DCMS will automatically ask for additionalproof that they are actual costs incurred and directly related to theproduction. The 10% figure applies to all producer fees on a production.

The move, which wasanticipated by Screen International in April, is aimed at cracking downon how films qualify as British, and thereby access tax relief. In some cases,the UK spend of a co-production is said to have been little more than a heftyfee to the local producer and financier. The fact that the whole budget iseligible for tax relief under UK tax rules has led to regular abuse by certainproducers and tax funds.

However, industry figureshave urged caution from the DCMS in applying the guideline, which could hurtlegitimate productions if used excessively. Some fear that producers willinevitably be the ones squeezed as tax financiers force them to reduce theirshare of fees in order to come in under 10%. Others are concerned about themeaning of "producer", questioning how the DCMS will define financiers.

Thelatest move is part of an ongoing review of the UK co-production treaties withother countries. In a crackdown last April, the UK announced it was raisingminimum spend to 40% for co-productions with France, Italy, Denmark andIceland. The hike followed a similar measure for Canada and meantco-productions with the four European countries must spend at least 40% oftheir budgets in the UK instead of the previous 30%.

'Wehave to make sure the co-production system delivers real cultural and economicbenefits to both partners,' said films minister Estelle Morris at thetime. 'Too often co-productions have not brought in the work and have notbeen screened in the UK. I am determined to address this.'

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