The UK government has exempted sale-and-leaseback schemes from a crackdown on tax avoidance. Click here for announcement
The UK tax authorities had previously said they wouldn't make exceptions for sale-and-leaseback funding arrangements under the new tax rules announced last week.
Such a move would have serious consequences for individual producers, some of whom could have been technically insolvent. It would also have affected at least 90 films including some of the highest profile UK productions, such as Casino Royale, Harry Potter and The Queen.
Chancellor Gordon Brown is believed to have been personally approached by leading industry figures as part of widescale industry lobbying.
The change of heart comes six days after a Treasury briefing effectively closed the door on so-called GAAP finance schemes - a move that it soon became clear had wider ramifications for Section 42 and 48 arrangements.
GAAP and sale and leaseback depended on what is called 'sideways loss relief', through which wealthy individuals, working through a partnership, could offset tax against expected losses on a film.
The Treasury is holding firm on GAAP, which is all but dead, but have backed down on sale and leaseback.
UK Film Council CEO John Woodward was pleased with the turnaround. 'This clarification is great news and welcome reassurance for the film industry,' he said.
'The Government has moved really fast to put an end to uncertainty that a number of films would lose their funding under sale and leaseback arrangements. Confidence is now restored across the industry.'
Producers and financiers also expressed relief. 'We are overwhelmingly relieved at the announcement by the Treasury,' said Mike Downey of Film & Music Entertainment. 'It sends out the right signal to independents and majors alike.
'The UK must be perceived to be a stable place to produce and finance films if we are to achieve growth of inward investment. If we are to maintain successful sustainable businesses we must continue to show the world that Britain cares about its creative industries and is willing to back its talent across the board.'
Yesterday, producers body PACT had confirmed that it would be lobbying hard for a change of heart, hoping that the government could be made to understand the effect of the decision not on big financial partnerships but on small producers.
Today PACT's director of film, Tim Willis said: 'We are extremely pleased and can't fault the government for putting this right so quickly.'
The UK Film Council and indeed the Revenue itself had separately compiled data on the number of films involved - said to be around 90.
The Treasury's new rules were blanket policies not aimed at the film industry specifically.
A spokesman for the UK Revenue said: 'The Government has taken account of the concerns expressed by the industry and acted swiftly to reassure film producers.
'The Government values the contribution of the film industry, both creative and economic, to the UK and wishes to create the conditions for a sustainable industry. The new film tax relief introduced in 2006 is designed to contribute to this.