Estates 'should charge VAT for film income'

Traditionally granting access to land or property for filming was treated as a right over land and therefore no VAT was chargeable unless the volume of additional services provided was such that the right over land was then ancillary, or that apportionment was a legitimate alternative.

Location agreements can vary greatly and embrace the provision of all manner of services, for example electricity, toilets, parking, and accommodation as well as limitations or exclusions to certain parts of buildings or grounds. Many owners will also have existing rulings from HMRC stating that income from films is exempt. But even such exemptions can be overturned.

Mike Harrison, Partner, Saffery Champness, speaking on behalf of the firm’s Landed Estates and Rural Business Groups, says: "It would appear that the HMRC view on film income is now very similar to that which they have adopted on weddings, the default position being that in reality there is no exempt supply of land at all.

"We have seen this at first hand in the case of Harewood Estate, where an owner has been unregistered, or has simply been applying what was considered to be generally accepted practice, but is no longer in the eyes of HMRC.

"On these grounds alone we would advise owners, it they are not already doing so, to charge VAT where that is commercially achievable. It should also be remembered that it can often be difficult to collect VAT after the event since production companies can be single-film vehicles. In cases where an owner believes exemption remains appropriate they should obtain a fresh ruling from HMRC to be sure of their position in those particular circumstances."