# UK film TAX question (not Café material)

**URL:** <https://boards.straightdope.com/t/uk-film-tax-question-not-cafe-material/230687>\
**Category:** Factual Questions\
**Created:** [February 23, 2004, 4:03pm UTC](https://boards.straightdope.com/t/uk-film-tax-question-not-cafe-material/230687 "2004-02-23T16:03:27Z")\
**Posts on this page:** 1\
**Page:** 1

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**Author:** ![Eats\_Crayons](https://avatars.discourse-cdn.com/v4/letter/e/278dde/32.png) [@Eats\_Crayons](https://boards.straightdope.com/u/Eats_Crayons)\
**Post date:** [February 23, 2004, 4:03pm UTC](https://boards.straightdope.com/t/uk-film-tax-question-not-cafe-material/230687/1 "2004-02-23T16:03:27Z")

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This is more of a tax/investment type question rather than an “arts” question…

Could someone explain this “[tax loophole](http://news.bbc.co.uk/2/hi/entertainment/3505767.stm)” a bit?

> [@](#):
>
> The Inland Revenue says investors “exploited” the loophole by putting money into a film but pulling out before it reached cinemas - and avoiding paying tax on their investment.

I don’t get it. How do they “pull out” of an investment like that? And is it something that is uniquely exploited my film investors or is it a more widespread practice with other forms of investments as well?

I am speculating that it’s sort of the following:

Multi-millionnaire rich dude/dudette invests $1 million in a movie.

Before movie makes profit, dude/dudette severs all connections to the film.

This results in a $1 million dollar loss. (Even though film goes on to earn lots and lots).

The $1 million loss offsets some tax stuff – like brings them into a different bracket or something.

Does the loss offset something? How does the multi-millionnaire due/dudette benefit from this? How the heck does the whole “pulling out” process work? Do they somehow “uninvest” the funds? How? Or is it like I speculate above and they lose the money they invest?