British film studios brace for inspections as they try to fend off crippling property tax bills

EXCLUSIVE: British film and television studios are bracing for inspections to stave off property tax bills that could threaten the survival of some film facilities.

Representatives of historic studios including Pinewood Studios and Ealing Studios sat down with a government agency last week as they launched a case against tax increases they say could hamper Britain’s booming manufacturing industry.

Deadline obtained a briefing note from the meeting with Valuation Office Agency (VOA) officials, in which studio officials called the meeting “useful” but said there were “unresolved issues.”

The VOA told studio representatives that they would conduct site inspections while the agency tries to gather more information on “taxable values,” an estimate of how much a property would rent if it were available on the open market.

Cadastral values ​​are used to calculate business tax, a tax on non-domestic property. The higher the taxable value, the higher the trade tax rate.

Pinewood Studios’ rateable value will quadruple from £3.95 million to £16.2 million ($19.6 million), according to draft valuations that come into force in April. Warner Bros. Studios Leavesden’s rateable value will double fivefold to £25.3m.

“The VOA has indicated that they initially received a lot of details from the studios from websites and are now conducting inspections as soon as possible after the release of the draft scorecard as most of their research data is very historical,” the briefing note said. called.

Studio executives are at a loss as to how the VOA calculated the massive tax increases. It is speculated that this is based on the income that major studios generate from long-term leases, such as B. Disney’s ten-year contract with Pinewood. However, many argue that it is not representative.

At last week’s meeting, the VOA said it had “three rent receipts” to support its calculations, but declined to share them, according to the memo. Studio representatives have provided evidence that industrial spaces converted into sound stages will not be rented at a higher rate than before the conversion.

Talks will come to an end before April when the VOA’s draft rates come into effect. The studios hope to avoid crippling bills that some say could raise existential questions about their future.

Superna Sethi, co-director of Twickenham Film Studios, where Bohemian Rhapsody said: “VOA has thrown a grenade at the film industry. In fact, we dare say it could spell the death knell for some of Britain’s most historic independent film studios.”

A VOA spokesperson said: “The new rateable value of a film or television studio reflects changes in rental values ​​from 2015 to 2021. Since 2015, the growth of streaming services and the appeal of production in the UK has led to an increase in rental values. We are in discussion with industry representatives about the ratings.”